The influential midfielder will see his current deal at the City Ground expire at the end of the season.
It would be expected that the agreeing of fresh terms would be a top priority for Forest, with Reid having already scored five times this season and provided as many assists.
The 31-year-old has also been recalled to the Republic of Ireland squad on the back of his impressive performances in the Championship.
Davies is delighted to see Reid getting the recognition his talent deserves, but insists contract talks must wait as Forest attempt to cement themselves among the promotion-chasing pack.
He said in the Nottingham Evening Post: "I am very pleased. Any player we get called up for international duty makes us very proud.
"The club are proud to get representation in any international team. So we are pleased.
"The players have to go and enjoy it, to enjoy being part of the squad and playing for their country. That is a very proud moment for them and their families.
"We will keep our fingers crossed that we get them back fresh and fit. That is important."
When pressed on whether the Reds were planning on opening talks with Reid regarding his future, Davies added: "Not at the moment.
"Our only focus at the minute is games, particularly during this busy period. We want to get games out of the way, to pick up points - which we are trying to do."