Strong Balance Sheets Have Helped REITs Weather Economic Crisis
Jan. 25 2021
Several actions REITs took during a tumultuous 2020, including deleveraging, having ample cash and lines of credit on their balance sheets, and laddering out debt, has put them in good stead to continue to access capital markets, according to Nareit EVP of Research and Investor Outreach John Worth.
“REIT credit ratings really performed quite well [in 2020],” Worth said. “REITs are one of the best-performing sectors in terms of the stability of their credit rating. Given the stresses that a number of REITs have gone through, I think that’s really a credit to the strengths of their balance sheets coming into the crisis.”
Looking ahead to investment trends in 2021, Worth said he is anticipating the increasing role of ESG in investment decisions, the growth of the digital economy, and the opportunity for recovery in some of the hardest-hit REIT sectors, including retail and hotels.
Worth added that keeping in mind the economic stress that REITs were under during the early months of the pandemic, it’s important now to look to how government policy can support tenants.
“We estimate that commercial real estate employees over 12 million people in the economy,” Worth said. “The emphasis has got to be on how we can support businesses and individuals who are in distress.”