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Lesson Learned: “When we look back at he downturn, the main lesson is the importance of sticking to the funda- mentals in exuberant times. A com- pany can’t get caught up in growth for growth’s sake.” Challenges and Opportunities: “We’re somewhat unique in that our sector really isn’t impacted by all the macroeconomic factors facing other
real estate sectors. We’re driven more by supply and demand in
local markets. We’ve proven in the last 24 months to be much
more resilient than the broader market.”
Role of REITs: “In our sector, REITs are going to be playing
the leading role. In student housing, most of our competitors
are small, private companies that are not well-funded and have
third-party sources of equity. As a public company, with access to
public equity and debt through our established banking relationships, we’re poised to lead the way as the recovery takes place.”
DAVID BRAIN, President & CEO
• Entertainment Properties Trust (NYSE: EPR)
• Sector: Specialty (Cinemas, Ski Resorts,
Charter Schools)
Lesson Learned: “Despite what we might think is new about the business world, the cyclicality remains. The les- son really is to keep yourself and your balance sheet in shape to withstand those cycles. I’ve been reminded of an old saying by Warren Buffett: ‘Be fear- ful when others are greedy, and be
greedy when others are fearful.’”
Challenges and Opportunities: “With the cinemas, public charter
schools and ski properties, we have some categories of investment
that we need to make sure we communicate effectively about to
make sure investors understand the durability and strong performance they’ve displayed, even during the down times.”
Role of REITs: “The role of REITs will be huge. Liquidity
matters, and the public REIT market gives that to the real estate
investor, and private investing really doesn’t. This will stay in the
memory for a long time.”
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Lesson Learned: “It was really about the balance sheet, maturity schedules and leverage. In 2009, everyone was wor- ried at the beginning of the year about enterprise risk, and clearly the debt markets are much better.” Challenges and Opportunities: “Our industry basically lags the economy
by about six months. When you look at the economy today, we
continue to lose jobs, even though we’re doing so at a lower rate
than in the past. This year looks like it’s going to be a lot like
2009—just a slugfest for operators, with rents probably declining
and occupancies maybe holding their own.”
Role of REITs: “It’s going to be a great time for REITs. The private sector is basically shut out of the capital markets today. Banks
aren’t making loans. It’s going to be just like the early 1990s, where
you had a situation where the REITs really started dominating.”
GORDON DUGAN, President & CEO
• W.P. Carey & Co. (NYSE: WPC) • Sector: Industrial/Office
Lesson Learned: “If a company has the wrong capital structure and gets over- leveraged, they can’t live to fight an- other day. It’s an age-old lesson, but don’t get too leveraged.” Challenges and Opportunities: “Over- all, net-lease activity fell in 2009 but we expect that to pick up in 2010 with
less competition. However, the fundamentals are going to be the
fundamentals. But you can deal with challenging fundamentals if
you have capital. Nine months go it didn’t look like there would be
enough capital, but now we are confident there will be.”
Role of REITs: “The companies that did not get into big
trouble in this downturn are going to have capital, be able to invest and take advantage of opportunities. This is all very good for
the industry, the economy and the country. Not only do REITs
employ people directly, but by having capital to provide growth it
is a very meaningful enterprise that REITs are involved in.”
D. BRAIN: ELI REICHMAN
“Liquidity is really important.
‘Cash is king’ is what they always
say, and that was never clearer
than in the last 18 months.”
