Jones Lang LaSalle fund management arm LaSalle Investment Management expects the global real estate investment trust (REIT) industry to be able to take advantage of woes in the commercial mortgage-backed securities market (CMBS) and pick up real estate from the private sector at cheap prices.
"The part of this thesis about the opportunity going forward is heavily based on the CMBS market," LaSalle Investment Management Asia Pacific securities chief executive Todd Canter told InvestorDaily.
"There are US$700 billion in CMBS loans coming due in between now and 2013. The CMBS market is closed and the conduit players are gone - if there is not another group of players to step in then obviously there are serious problems with the properties that are tied to that debt.
"So the opportunity is for well-capitalised companies in the real estate sector to buy at distressed prices."
Canter argues that real estate companies in the private sector are much more highly geared than in the public sector, because the latter has raised US$50 billion since the start of the crisis to restructure balance sheets.
He estimates that in some cases the gearing of private companies is as high as 100 per cent.
As a result, REITs are much better positioned to snap up these properties, Canter said.
The majority of CMBS loans are maturing in the US and the UK, Fitch Ratings structured products director David Carroll said.
In Australia, the number of loans due to mature is relatively modest, he said.
"Calendar year 2009 will see a maturity hump of A$3.4 billion, being 44 per cent of total maturing CMBS," Carroll said.
As such, the prospect of a wide-scaled distressed sell-off of properties in the private sector is unlikely, he said.
