Mizuho’s REIT/Real Estate Summit Recap

Jim Gorman
Jim Gorman Director
August 28, 2019

“Buy land, they’re not making it anymore,” quipped Mark Twain.

Real estate holdings have long been regarded as a driver of long-term value and equity growth, but that approach doesn’t scale easily for widespread exposure to real estate. Buying and maintaining physical properties is difficult, so many institutional investors turn to real estate investment trusts (REITS) to tap potential upside without the upkeep. And it has penetrated virtually every type of real-estate property.

Mizuho Americas recently held the third annual Mizuho REIT/Real Estate Conference in New York. As usual, it facilitated insightful dialogue between institutional investors and C-suite executives of some of the most dynamic REIT companies, as well as collaborative content that made the conference greater than the sum of its parts. Below are some highlights from REIT Equity Research Analyst Haendel St. Juste.

The Wisdom of Crowds

The lunch break featured Michael Walsh, strategic advisor to CrowdStreet, an investment platform making commercial real estate offerings available for direct investing. It aims to become “the Charles Schwab of commercial real estate,” said Walsh in a nod to that firm’s success bringing discount brokerage to the masses.

“Around 2013, the SEC made it possible to raise capital online for private securities and private funds,” Michael said. This set the stage for CrowdStreet to crowd source capital from a broad base of investors in support of a variety of high quality commercial real estate ventures.

Industrial: Onward & Upward

As we head into the final stages of the business cycle, industrial REITs attending the summit shared one clear message: there is still plenty of runway ahead, with recent asset pricing, absorption data points, and demographics to support earnings and net asset values (NAVs). Some even suggested that supply was not enough to fill the demand of last-mile consumers in certain markets. St. Juste views these factors as positive differentiators from other property types.

Triple Net Lease: The Best of Times

Triple net REITs, which refer to lease agreements where the tenant is responsible for all costs including property taxes and maintenance, are another area for opportunity. After meeting with six companies St. Juste expressed confidence, noting the sector as a must-own. Some of the underlying factors behind its healthy outlook include low rates, a “Goldilocks” economy, low tenant risk, favorable weighted average cost of capital, and investment spreads.

When it comes to triple net, M&A was another prevalent theme. The subsector is ripe for such activity, a result of multiple disparity, premiums to NAV, and scalability, all of which create opportunities to generate value. All told, St. Juste sees potential for the triple net sector to outperform in the second half of 2019 and into 2020 with earnings as upside catalysts.

Single-Family Rental Feeling Better

The summit also left a positive outlook for single-family rental. Attendees noted leasing traffic was up more than 20%, reflecting strong demand and supporting pricing power. Plus, the continued decline in tenant turnover, now down nine consecutive quarters, is helping to both lift revenue and lower turnover-related expenses. Elsewhere, property taxes are higher than expected, but still at a comfortable range.

In all, more than 20 REITs – representing the full range of sectors including gaming, healthcare, hotel, industrial, residential, and triple net – gathered to discuss the trends and challenges in the real estate space. In an industry with so many subsectors there was no clear consensus, but most agreed that low interest rates and macroeconomic tailwinds should serve as a positive backdrop for REITs as a whole.


Mizuho Americas is a leading financial institution comprising several legal entities that offer services which include corporate and investment banking, financing, securities, treasury services, asset management, and research. If you are interested in learning more about Mizuho's Equity Research offerings, please call Mizuho Securities USA LLC at +1-212-209-9300.

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