Fundamentals Are Key to Success in the Commercial Real Estate Sector
September 23 2015 - 8:30AM
Business Wire
CIT Executive Spotlight Examines Outlook of the
Commercial Real Estate Sector
While the commercial real estate sector continues to perform
well, the question remains as to the impact a future interest rate
increase may have on the sector. Despite this or the potential of a
commercial real estate bubble, partnering with a strong private
equity sponsor is one of the things investors can do to better
protect themselves against a system shock. These are some of the
observations from Matt Galligan, President, CIT Real Estate
Finance, a division of CIT Group Inc. (NYSE: CIT), a leading
provider of commercial lending and leasing services, in “Commercial
Real Estate Financing Outlook” (www.cit.com/galligan), the latest
piece of market intelligence in a series of in-depth CIT executive
Q&As.
“Even with some potential uncertainty on the horizon, the
outlook for commercial real estate financing in the year ahead
still looks fairly strong,” said Galligan. “However, success boils
down to a few fundamentals, such as partnering with a good private
equity sponsor, performing your due diligence, especially if you’re
pursuing property in an unfamiliar market, and doing your homework
on the underwriting.”
Some of the other trends Galligan expands upon include:
- Interest Rate Increase Could Mean
Price Decrease: With prices of commercial real estate assets at
high levels, an interest rate increase could slow down price growth
and cash flow into the sector.
- Growth in “Gateway” Cities:
Cities on both coasts that are known to have high traffic between
Europe and Asia are seeing growth, while Midwestern cities are
experiencing muted growth. Austin and Denver are outliers, doing
fairly well because of access to natural resources and
technology.
- Millennials Are Driving Multifamily
Homes: Multifamily homes are driving the sector due in part to
millennials’ purchasing habits. Millennials prefer renting and
living in urban spaces, but only time will tell if their
preferences change once more of them start families.
- Partner with Strong Private Equity
Sponsors: Sponsors have market specific data, including
demographic information, supply of particular types of real estate,
and know and understand the niches within specific markets to
ensure investments are fruitful.
EDITOR’S NOTE:
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About CIT
Founded in 1908, CIT (NYSE: CIT) is a financial holding company
with more than $65 billion in assets. Its principal bank
subsidiary, CIT Bank, N.A., (Member FDIC, Equal Housing Lender) has
more than $30 billion of deposits and more than $40 billion of
assets. It provides financing, leasing and advisory services
principally to middle market companies across more than 30
industries primarily in North America, and equipment financing
and leasing solutions to the transportation sector. It also offers
products and services to consumers through its Internet bank
franchise and a network of retail branches in Southern California,
operating as OneWest Bank, a division of CIT Bank, N.A. cit.com
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CIT MEDIA RELATIONS:C. Curtis Ritter, 973-740-5390Senior
Vice President of Corporate CommunicationsCurt.Ritter@cit.comorMatt
Klein, 973-597-2020Vice President, Media
RelationsMatt.Klein@cit.comorCIT INVESTOR RELATIONS:Barbara
Callahan, 973-740-5058Senior Vice
PresidentBarbara.Callahan@cit.com
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