New ICSC chairman Rufrano cautions on higher rates, rising inflation

The former CEO of VEREIT is concerned about the impact of stagnant GDP growth on the US commercial real estate market.

Glenn Rufrano, the former CEO of Phoenix-based diversified real estate investment trust VEREIT, is settling into his new role as the chairman of the retail-focused trade group ICSC. But the veteran dealmaker is cautious about the impact that rising inflation and interest rates and stagnant GDP could have on the recovery of the US commercial real estate market.

“I always look at three elements at one time: inflation, GDP and interest rates, because they’re all very much related – I don’t think we could talk about inflation alone,” Rufrano told Real Estate Capital USA.

Inflation in the US was at 7 percent in December, a sharp rise from the 1.36 percent seen during the same period in 2021 and much higher than the historical average seen over the past 20 years, according to data from, a global data provider that tracks inflation rates globally. Meanwhile, the 10-year Treasury was at 1.87 percent as of Thursday morning, its highest level in two years.

Managing a real estate company in an environment where rates and inflation are rising can be tricky, Rufrano said.

“If GDP and interest rates are the same, that’s not so bad because it means the economy is growing at that high amount and therefore could afford for prices to go up and interest rates in that situation tend to be stabilized,” Rufrano said. “The problem in the United States is shortages and other [factors] could stall GDP growth – at 3 or 4 percent – while inflation grows at [around] 7 [percent]. In this situation, you have higher interest rates, higher inflation but not high GDP growth. That’s the worst case for the economy and that’s what we’re worried about going into 2022.”

Rufrano’s comments come as he enters the next stage of his career after turning around VEREIT, which had been enmeshed in a series of high-profile accounting scandals, and arranging its sale to Realty Income, a blue-chip REIT. Even with the covid-19 pandemic, Rufrano has largely seen a liquid market for debt apart from a blip in the first quarter of 2020. This liquidity allowed Rufrano and the VEREIT team to execute on their strategy and eventually complete sale.

“The debt markets were very liquid at the end of 2019, rates were generally low and buyers were finding opportunities to work with the lending community,” Rufrano said. “This all changed in the first quarter of 2020, so much so that we feared the capital markets could be frozen and we drew a third of our $1.5 billion revolver [at VEREIT] as a caution against some of the largest banks in the world not funding. The most remarkable outcome of 2020 was that the capital markets were once again liquid by November of that year, and we were able to borrow $1.3 billion at attractive rates in the bond market.”

The former VEREIT CEO was appointed chairman of the ICSC in December, the latest iteration of a career with tenures at companies including real estate investment trust New Plan Excel and advisory Cushman & Wakefield, where he helped the firms navigate short-term headwinds before helping to execute sales.

When it comes to retail, Rufrano believes that major setbacks caused by the onset of the pandemic and shifts toward online shopping are beginning to wear off.

“What has emerged is retailers have learned you have to have a combination of bricks and mortar, people coming to the store and buying through e-commerce, ordering electronically and get delivery,” Rufrano said.

As well as having a good grasp of omni channel, ICSC prioritizes retailers that understand how to service their clientele.

“Service used to mean that when you walked into the store you would be met with someone who smiled and made you feel good,” Rufrano said. “Service today means that you know who your clientele is, you have data on that clientele and you know how to service them with your stores and your e-commerce ability omni channel.”