Fitch Gives REITs Thumbs Up for 2015 – NMP Skip to main content

Fitch Gives REITs Thumbs Up for 2015

Phil Hall
Dec 18, 2014
Thumbs_Up_12_18_14

Next year promises to be a strong year for the real estate investment trust (REIT) sector, according to a report issued by Fitch Ratings. The ratings agency gave the sector a “Positive Sector Outlook” for 2015, citing a series of factors to support its optimism on REIT vibrancy and viability.

“We believe portfolio focus and tactical diversification, lower risk growth strategies, good liquidity management, minimal share repurchase risk, and enhancements to capital access via at-the-market equity programs are key drivers and will continue for the foreseeable future,” Fitch Ratings said in a statement. “All of these elements are currently reflected in Fitch's issuer ratings and rating Outlooks. In many cases, issuers with Positive Rating Outlooks have embraced many of these credit-enhancing rating drivers. We are maintaining our stable Ratings outlook for the U.S. equity REIT sector for 2015, given expectations of continued solid liquidity driven by good access to capital, improving property-level fundamentals across nearly all asset classes and lower-risk strategies. These positive elements are offset by expectations of relatively unchanged leverage, a continued, slow economic recovery, and concerns regarding an increase in interest rates.”

Fitch added that stock buybacks should remain modest and represent the largest threat to the sector’s ability to maintain stable leverage metrics next year.

But U.S. REITs may have new competition in 2015 from south of the border. Latin America’s first mortgage REIT, Fideicomiso Hipotecario (FHipo), completed an initial public offering on the Mexican Stock Exchange on last month, raising more than $633 million – with nearly 60 percent coming from U.S. investors were from the United States. FHipo works with Infonavit, a government-sponsored lender that originates 70 percent of Mexican residential mortgages.

FHipo was created specifically to attract U.S. investors, according to Michael Fitzgerald, a partner in the New York office of the law firm Paul Hastings LLP. In an interview with the Florida-based Daily Business Review, Fitzgerald—who played a major role in the FHipo launch—acknowledged that it was crucial to play up the safety of this REIT’s, as well as its potential.

"We had to be able to get the underwriters and international investors comfortable with this product by comparing these assets with the mortgage-backed securities sold in the U.S.," said Fitzgerald.

Published
Dec 18, 2014
Redfin 2Q Revenues Up, Profits Down

Company officials said that in the third quarter they expect total revenue between $590 million and $627 million.

Industry News
Aug 05, 2022
Mutual of Omaha Mortgage Announces Wholesale Division

Loans available through its own platform and in partnership with ReadyPrice, LenderPrice, and Loansifter.

Industry News
Aug 05, 2022
MISMO Seeks Public Comment On 3 eMortgage Resources

Updates proposed to MISMO Business Glossary, eMortgage Glossary, and eModification Reference Flyer.

Regulation and Compliance
Aug 05, 2022
Deal With Opendoor Allows Zillow Back Into iBuying Business

As it releases rough 2Q earnings report, Zillow announces partnership with former rival.

Tech
Aug 04, 2022
Rocket Companies' Earnings Plunge 94% In 2Q

Mortgage originations fell 59% year over year, while rate lock volume fell 65%.

Industry News
Aug 04, 2022
Remembering Steven Schnall, Quontic Bank CEO

Schnall died in a motorcycle accident while on his way back from a biking trip to Canada. 

Industry News
Aug 04, 2022