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Executives say Trump presidency would be bad for REITs

Donald Trump, with his warnings of a “big, fat, ugly bubble,” has sold himself as the messiah of the American economy.

Photo by Rafael Matsunaga/ Flickr
Photo by Rafael Matsunaga/ Flickr

However, there are signs that his peers predict uncertainty in the markets due to his possible ascendancy to the highest office in the land.

“I’m gonna go with the consensus,” Mitchell Rudin, the CEO of real estate investment trust Mack-Cali Corporation, said during a panel discussion at the SIOR Fall World Conference.

“If Trump were to win, there would be significant uncertainty in the marketplace for a period of time. No markets, particularly real estate, enjoy uncertainty. So we had a little bit of pause in certain parts of the market. And there’s a feeling that I just want to see how this all sorts out. Not that there’s passion for one candidate or the other. It’s a walk into the great unknown.”

If Trump wins, he would enter office during a healthy period for REITs. According to the latest FTSE NAREIT All REITS Index, U.S. REITs outpaced the broader equity market during the first nine months of the year. American REITs posted a 12.57 percent return for the period. This was higher than the S&P 500’s total return of 7.84 percent.

Jason Fox, the president and head of global investments at W.P. Carey, echoed Rudin’s statement, saying that a Trump victory may create “a period of chaos.”

“If it is Trump, I think it does create a lot of uncertainty. There will probably be a period of chaos where people just don’t know what to expect to happen. Ultimately, it’s not good for REITs,” he said, adding that he expects more capital inflows in the event of a Hillary Clinton win.

Meanwhile, T. Wilson Eglin, the president and CEO of Lexington Realty Trust, was skeptical that the result of the election would affect his company.

“There’ll be no change. I view the next president as a caretaker who’ll probably be a one-term president,” he said.

Rudin and Fox are not the first executives to express dread over a Trump presidency. Earlier this month, a group of corporate leaders released a letter that said that “Donald Trump is simply too reckless for American business.” The signatories of the letter include Carlos Gutierrez, the secretary of Commerce during the George W. Bush administration, and Wikipedia founder Jimmy Wales.

Investors also seem to be cheering on Clinton. According to research from economists at Dartmouth and University of Michigan, Clinton’s strong performance in the first debate launched “the most consequential single event” during the 2016 election cycle. The researchers claimed that the movement of US stock futures and the Mexican peso mimicked Clinton’s election odds.

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