June 5, 2017 / 3:02 PM / 4 months ago

Fitch U.S. REIT Handbook: E-commerce is a Sector Gamechanger

(The following statement was released by the rating agency) Link to Fitch Ratings' Report: U.S. Equity REITs Handbook (A Detailed Review of Real Estate Investment Trusts — First Edition) here NEW YORK, June 05 (Fitch) A notable development in recent months could significantly change the U.S. equity REIT sector and how the market goes about investing in it, according to Fitch Ratings in the first edition of its Equity REIT Handbook. Struggles continue for the challenged retail sector as the incursion of E-commerce has led to some retailers gradually shrinking their imprint throughout the country. Lack of rent growth will prove to be especially problematic for class B malls and outlying strip centers as they lose tenants. That said, Fitch's view of retail REITs remains largely neutral. "Approximately 70% of retail sales will still be made in a physical store in 2020, compared with around 80% today," said Managing Director Steven Marks. "Consumers by and large still enjoy shopping as a leisure activity, plus a significant portion of online sales are connected with a store visit." In contrast, healthier fundamentals and stronger performance await subsectors like office and industrial REITs. Slightly shrinking demand for space should not curtail rent growth while strong employment growth will buoy tech employment-oriented markets. "Signs of thawing in tech IPOs and strong venture capital fundraising suggest healthy fundamentals over at least the next several months," said Marks. Meanwhile, accelerating growth in the broader economy (Fitch's global forecast calls for 2.9% world GDP growth) and growth in E-commerce-related distribution centers will be a plus for industrial REITs. Supply chain reconfigurations would be longer-term concerns if economic growth slows that could lead to weaker industrial property fundamentals. Fitch's new REIT handbook also includes sector-level financial and credit metrics, and summary credit profiles for 49 companies, including credit drivers and ratings sensitivities. Several charts track key sector and property-type trends that affect real estate companies. The report is full available at 'www.fitchratings.com' or by clicking on the above link. Contact: Steven Marks Managing Director, Head of U.S. REITs +1-212-908-9161 Fitch Ratings, Inc. 33 Whitehall Street New York, NY 10004 Media Relations: Sandro Scenga, New York, Tel: +1 212-908-0278, Email: sandro.scenga@fitchratings.com. Additional information is available on www.fitchratings.com ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. 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