The heightened volatility in stocks may be hurting the necks of traders forced to contend with whipsaw price movements. The market for private real estate meanwhile remains as tight as a drum, said Todd Briddell, CEO of CenterSquare Investment Management. ‘In the U.S. you are seeing very little change in private equity real estate transactions,’ said Briddell. ‘You are seeing a little bit of pick-up in credit spreads which may in future, perhaps 2016, have an impact on cap rates, the way people are pricing real estate, but for the most part private real estate transactions are very competitively priced.’ The iShares U.S. Real Estate ETF (IYR), which tracks publicly traded REITs, has fallen almost 10% so far in 2015. Briddell said profit taking is playing a large role in the selloff, as well as investor panic over a looming Federal Reserve rate hike. ‘Some of the pullback you’ve seen is really just a give-back from last year’s outperformance,’ said Briddell. ‘What you are seeing more recently is a retrenchment that is a lot like the taper tantrum that took place over two years ago when the Fed first announced that there might be some pulling back in quantitative easing.’ Selling out of real estate investments due to fear of the Fed is wrong in Briddell’s view because the asset class offers diversification, generates income and provides a healthy total return.
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