Differing Views on Commercial Real Estate

Ok here's two views of commercial Real estate


Reprieve for REITs



"More equity and debt issues hit the market, and REITs on both sides of the border started to deleverage their bloated balance sheets. As a result, REIT units quickly raced off their market bottoms, rising 55% through Friday's close, compared with 43% for the broader benchmark here in Canada, and more than 80% in the U.S. versus 51% for the S&P 500. Simon Property, which plunged to US$25.95 in March, closed yesterday at US$64.77."

With increased liquidity, the Canadian REIT sector is now well positioned to address its debt due in the second half of the year and 2010, said Neil Downey, RBC Capital Markets analyst.




and

Price Waterhouse Coopers: Limited Buyers, Scarce money: Commercial Real Estate in Tough Times

PWC sees

- Tight industry-lending conditions

- A dearth in investor appetite for commercial mortgage backed

securities (CMBS)

- Expectations for higher capitalization rates which imply decreased

valuations

- Financial weakness and/or sluggish growth amongst tenants




According to CIBCWM, if you invested in a REIT you have earned 34.3% last year.

So who's right?

Seasoned experts who have been waiting for CAP rates to go up have been waiting a long time...in fact, some believe cap rates might go down further because interest rates are at historic lows. Lenders are giving 5 and 10 year mortgages at rates that would knock your socks off 10 years ago.

Let's see whats going to happen