It is predicted by Barclays that the year 2016 has "turbulence ahead" for U.S. real estate investment trusts, which may affect the business of Vornado Realty Trust, General Growth Properties and Rouse Properties, citing "rising interest rates" and "geopolitical uncertainty" as the main causes.
According to The Real Deal, the London-based banking giant said that it does not "anticipate the same robust re-leasing spreads" in Vornado's New York City real estate portfolio and also noted "mounting evidence that [New York City] retail rents may have hit an inflection point."
Like Vornado, Barclays said General Growth Properties has benefited from "robust re-leasing spreads," over the last few years as well as "investor appreciation for its urban street retail acquisition strategy." But this year, those benefits "appear to be dissipating" with Barclays citing "formidable headwinds in the mall space."
GGP's plan to "no longer seek to acquire urban street retail" is a strategy that "makes sense given rising street retail values," which indicates that the strong U.S. dollar may hamper international tourism, and therefore reduce the company's upside of its prized retail locations on the Upper Fifth Avenue.
Meanwhile, Rouse Properties has recently received a take-over bid from shareholder Brookfield Asset Management that would see the management firm acquiring the rest of the mall REIT's outstanding share at 26 percent premium.
Barclays has predicted a wary outlook for the REIT sector in 2016 and cited the likelihood of another interest rate hike from the Federal Reserve this year, as well as a "solid but decelerating growth prospects" for REITS overall.
In other news, Barclays Plc will announce job cuts in its investment banking business across Asia, which include the closing of its businesses in Korea and Taiwan, as reported by the Business Insider.
Also included in next week's cuts are corporate finance and advisory staff in those two countries, as well as equities sales and research staff, which include 50 jobs across Asia, as Barclays seeks to cut costs due to global restructuring.