GlobeSt.com chats with Chris Sands, founder of Sands Investment Group, about what REITs and institutional investors will be assessing pertaining to their retail assets in the coming year.
Las Vegas, NV (June 8, 2017) REITs and institutional investors will be assessing where they have exposure in the retail assets they own. Those thoughts are according to Chris Sands, founder of Sands Investment Group.
“They will be pruning the non-core assets in order to maintain a healthy portfolio,” he tells GlobeSt.com.
According to Sands, who recently chatted with GlobeSt.com surrounding last month’s ICSC RECon event, developers are going to assess how to factor in with retailers the impact of increases in interest rates. “They will also be looking at the impact of higher cap rates and how that effect their proformas and further impacts the relationship with tenants they are building for.
Market analytics are showing that investment sales are down across the board from previous years.”
What people don’t factor, according to Sands, is how aggressively of a seller’s market it has been. “The byproduct is that there is a lot of exchange money in the market,” he says. “When that slows the investment criteria changes.”
And when there is a lot of exchange money people are forced to make a deal, even pay more, Sands continues. “However, if that slows because investment sales slowdown, it will have a delayed impact but the outcome will be fewer trade buyers in the market. That eliminates the pressure to pay more because the investors are making more patient investment decisions. Ultimately, this will lead to a temporary disconnect be buyers and seller until the market adjusts.”
And despite the lingering question of the impact of online sales and e-commerce, brick and mortar still has a lot of runway, he explains. “Retail is a great sector for investment opportunities. Daily needs are still a safe bet and a safe investment.”