REITs Named as EPA 2021 ENERGY STAR Award Winners

April 15, 2021 · reit.com
REITs Named as EPA 2021 ENERGY STAR Award WinnersSarah Borchers…Apr. 15 2021
Teaser

Seven REITs received the ENERGY STAR sustained excellence award, the highest honor.

Tags
Content

Thirteen REITs have been named as 2021 Environmental Protection Agency (EPA) ENERGY STAR Partner of the Year Award winners, with seven of the 13 receiving a Sustained Excellence Award—the highest honor among ENERGY STAR Awards.

Each year, EPA honors a group of businesses and organizations that have made outstanding contributions to protecting the environment through superior energy efficiency achievements.

EPA presents the Sustained Excellence Award to businesses or organizations that have already received ENERGY STAR Partner of the Year recognition for a minimum of two consecutive years and have gone above and beyond the criteria needed to qualify for recognition.

REITs that received the Sustained Excellence Award include:

Kilroy Realty Corp . (NYSE: KRC), its sixth consecutive Sustained Excellence win

Vornado Realty Trust (NYSE: VNO), its sixth consecutive Sustained Excellence win

SL Green Realty Corp . (NYSE: SLG), its fourth consecutive Sustained Excellence win

Office Properties Income Trust (Nasdaq: OPI), its second consecutive Sustained Excellence win

Boston Properties, Inc . (NYSE: BXP), its first Sustained Excellence win

Hudson Pacific Properties, Inc . (NYSE: HPP), its first Sustained Excellence win

Welltower Inc . (NYSE: WELL), its first Sustained Excellence win

In addition, The RMR Group LLC, which manages all properties owned by Office Properties Income Trust, had its first Sustained Excellence win.

REITs that were named as a Partner of the Yearaward winner include:

Columbia Property Trust, Inc, (NYSE: CXP); Digital Realty Trust, Inc. (NYSE: DLR); Empire State Realty Trust, Inc. (NYSE: ESRT); Physicians Realty Trust (NYSE: DOC); Piedmont Office Realty Trust, Inc. (NYSE: PDM); and, Ventas, Inc. (NYSE: VTR).

Article Author(s)

REITs Seen Benefitting from Economic Recovery, Unleashing of Pent-Up Demand

April 08, 2021 · reit.com
REITs Seen Benefitting from Economic Recovery, Unleashing of Pent-Up DemandSarah Borchers…Apr. 8 2021
Teaser

NYU Schack REIT Symposium featured leading REIT CEOs across a range of sectors.

Content

The REIT sector has remained resilient throughout the pandemic and is ready to take advantage of the recovering economy and unleashing of pent-up demand that is expected to characterize the rest of 2021 and beyond, according to the NYU Schack Institute of Real Estate’s 25th Annual REIT Symposium: REIT Leadership in a Post-Pandemic World.

Adam Emmerich, partner at Wachtell, Lipton, Rosen & Katz, opened the symposium by making several predictions, including: work from home, or some version thereof, is here to stay; ESG is at an inflection point; 2021 will be the year of the “REIT mega deal”; and, the REIT universe will continue to expand.

In a panel titled The Bull Case for REITS Post-Covid, and How to Play It, Mike Kirby, co-founder and director of research at Green Street, argued that there is indeed a strong bull case for the industry at this time. “REITs have not looked this cheap in 15 years,” he said.

Kirby said it does appear that the stock market overreacted during the course of the pandemic. The recovery in REIT share prices “has been for the right reasons,” he said, given the “very favorable” economic news.

During a keynote lunch session, Prologis, Inc. (NYSE: PLD) chairman and CEO Hamid Moghadam, noted that a key development to come out of the pandemic is the realization that supply chains have been “so stretched and fine-tuned for efficiency that they have no resiliency.” The trend of declining inventories has “turned a corner,” he added.

And while the pandemic has accelerated the penetration of e-commerce, Moghadam said he expects there might be some leveling off of that penetration once the economy fully reopens. However, e-commerce will keep growing off of a higher base, he added.

During a fireside chat, Debra Cafaro, chairman and CEO of Ventas, Inc. (NYSE: VTR), said the broader economy is poised for a “break-out to the upside.” While the economy will benefit from increased infrastructure spending and pent-up consumer demand, corporate activity, such as business travel, is likely to stay muted, she added. Cafaro stressed that in order for the economy to reach its full potential, there must be a strong uptake of the new COVID vaccines.

Cafaro also commented on investment in life science real estate, noting that inflows into the sector have never been greater. For its part, Ventas invested $1.3 billion into the sector during the pandemic, she pointed out.

Meanwhile, Sam Zell, founder and chairman of Equity Group Investments, said getting everyone back to work is “very, very important.” However, he added that the process could be “difficult, and will operate in spurts.”

During a keynote lunch session on day two of the conference, Zell said there is probably still upside potential in industrial real estate given the scale of conversion to online business, while the office sector faces “significant over-supply.” Price discovery in the retail sector is likely to occur once liquidations begin—which will probably be in the next six to eight months, he predicted. “There’s a lot of over-priced retail,” Zell said.

Barry Sternlicht, chairman of Starwood Capital Group, also participated in the conference. Asked if capital will keep flowing in the real estate sector, he said that it would. “We’re available to produce yield in a world that’s yield-less.”

He also noted that there hasn’t been a lot of distress yet in real estate, given that rates are low and banks are not eager to foreclose. As the economy re-opens, Sternlicht expects to see more distress and sales.

Among other observations made during the conference:

  • “The door is open for public to public (transactions), but not particularly wide open,” said Mike Kirby.
  • Peer to peer equity mergers in the office space are not all that likely. The question, rather, is whether there will be take-private deals, said Boston Properties, Inc. (NYSE: BXP) CEO Owen Thomas.
  • Victor Coleman, Chairman and CEO of Hudson Pacific Properties, Inc. (NYSE: HPP), said the REIT’s studio assets are benefitting from the “voracious appetite” for content, which is at a “pinnacle.”
  • Investors want growth, said Mary Hogan Preusse, founder and principal of Sturgis Partners LLC, and will be watching to see how companies deploy their strong balance sheets.
  • Lisa Palmer, president & CEO of Regency Centers Corp . (Nasdaq: REG), said she believes remote working will be one of the permanent changes from COVID. The pandemic has also reinforced the importance of last-mile facilities, she added.
  • Tech and life science companies are competing for the same office space, forcing life science companies to make faster leasing decisions, according to John Kilroy, chairman and CEO of Kilroy Realty Corp. (NYSE: KRC). He added that while office space isn’t going away, “it’s going to be used differently” in future.
  • Equity Residential (NYSE: EQR) President and CEO Mark Parrell noted that even before the pandemic, the affluent renters it targets were geographically dispersing. That trend is expected to accelerate, he said.
  • Sherry Rexroad, managing director, global real asset securities at BlackRock, said a focus on sustainability “makes good business sense in the long run.”
Article Author(s)

REITs Face Challenges in Taking Advantage of Green Subsidies and Incentives

March 30, 2021 · reit.com
REITs Face Challenges in Taking Advantage of Green Subsidies and IncentivesSarah Borchers…Mar. 30 2021
Teaser

Stephen Giordano, principal-Washington National Tax at KPMG LLP, participated in a video interview in conjunction with REITwise 2021: Nareit’s Law, Accounting & Finance Conference.

Giordano discussed some of the tax issues that REITs may need to resolve as they continue to improve the energy efficiency of their properties, including the use of green subsidies and incentives.

“The first challenge is even being able to use the subsidy as it’s intended,” Giordano said. REITs, by design, often don’t have the taxable income necessary to use federal tax credits. State and local tax incentives, meanwhile, present different difficulties, he said.

Giordano also commented on the 2017 tax reform law, which limited the deductibility of interest under Section 163(j), and some of the outstanding issues in that area for REITs.

The question REITs primarily face is whether to opt out of 163 (j), Giordano explained. “That’s an important choice because once the election out is made, it’s irrevocable.” The decision is closely linked to depreciation decisions, he said, and where REITs are going to deploy their capital. Modeling, and getting the numbers right, is key, he added.

Meanwhile, Giordano discussed tax increment financing and some of the tax implications for REITs specifically in connection with this type of financing.

Content

Stephen Giordano, principal-Washington National Tax at KPMG LLP, participated in a video interview in conjunction with REITwise 2021: Nareit’s Law, Accounting & Finance Conference.

Giordano discussed some of the tax issues that REITs may need to resolve as they continue to improve the energy efficiency of their properties, including the use of green subsidies and incentives.

“The first challenge is even being able to use the subsidy as it’s intended,” Giordano said. REITs, by design, often don’t have the taxable income necessary to use federal tax credits. State and local tax incentives, meanwhile, present different difficulties, he said.

Giordano also commented on the 2017 tax reform law, which limited the deductibility of interest under Section 163(j), and some of the outstanding issues in that area for REITs.

The question REITs primarily face is whether to opt out of 163 (j), Giordano explained. “That’s an important choice because once the election out is made, it’s irrevocable.” The decision is closely linked to depreciation decisions, he said, and where REITs are going to deploy their capital. Modeling, and getting the numbers right, is key, he added.

Meanwhile, Giordano discussed tax increment financing and some of the tax implications for REITs specifically in connection with this type of financing.

Article Author(s)