January 28, 2014
Interviewed by: David Snow
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Game Change 2014: Interest Rates

Kathleen Barthmaier, an Executive Director in the Investment Department at W. P. Carey, shares a prediction for what could be a game-changer in the 2014 real estate market: interest rates.

Kathleen Barthmaier, an Executive Director in the Investment Department at W. P. Carey, shares a prediction for what could be a game-changer in the 2014 real estate market: interest rates.

Game Change 2014: Interest Rates

With Kathleen Barthmaier of W. P. Carey

Kathleen Barthmaier, W. P. Carey:

Interest rates drive the real estate market, so I think everyone will be watching interest rates very closely over the next year. I operate in the net lease market and I think that right now we’re experiencing a game-changing moment.

Historically, net lease has operated under the radar as a very specific niche, but over the past few years – maybe two years – there have been a number of IPOs and M&A activities that has increased the market capitalization of the net lease sector to about 35 billion, which is double what it was two years ago. It will be really interesting to see over the next year how the market continues to receive the net lease sector and how the industry responds to that.

From our perspective as investors, it’s a very exciting time for net lease and I think there are fantastic transactions that are driven by the long term leases – they’re very stable – and we’re able to invest in very diverse products.

It will be interesting also to see how companies put all that capital to work and continue to focus not only on the capitalization rates, but the real estate fundamentals, making sure that you’re buying the properties at the right basis and taking into consideration the refinancing risk, particularly in light of a rising interest rate environment.

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