REITs - Real Estate Investment Trusts - Info &amp; Discussion

Top 167. Aug 30, 2001 7:54 AM

» CyclingInvestor - EOP dividends

Actually, EOP has never dropped their dividend.
The 0.37 to 0.33 drop which shows up in Yahoo is
an error that has crept in to their db - EOP's
10K for 1999 shows their 98/99 dividends were
(32 32 37 37) (37 37 42 42). These errors are not
that uncommon, so whenever something looks a bit
screwy, it is best to check it out.

-- posted by CyclingInvestor

Top 168. Aug 30, 2001 3:17 PM

» RhyneN - Re: EOP dividends

In response to message posted by CyclingInvestor:

Thanks for pointing out that error, CyclingInvestor.

-- posted by RhyneN

Top 169. Sep 1, 2001 9:53 PM

» JenL_2 - Barron's Interview with Susan Byrne

9/3 Barron's has the latest in a string of interviews with value and fixed income fund investors. They all seem to like REITs:

An Eye for Yield

In this market, says a money manager, look for stocks that provide high total returns

by Sandra Ward

(excerpts)

An Interview With Susan Byrne ~.... After lowering her forecast for corporate profits this year and with expectations of modest growth next year, Byrne is keeping sharply focused on "total return" investments -- companies delivering solid earnings growth, paying sustainable dividends, and offering higher returns than what are available from other asset classes. Cyclicals are in her mix, as are real-estate investment trusts and, yes, energy companies..... Her approach, honed in 30 years of investment experience, is simply to buy stocks at a discount to their growth rate in industries that are best positioned according to her macroeconomic outlook.....

Q: What does this mean for portfolios?
A: Beyond cyclicals, people should look for companies that could be considered solid total-return candidates.

Q: Companies that pay dividends?
A: Yes, and companies with the ability to grow the dividend, not just pay it. If we are talking about an environment of slow growth, low interest rates and low inflation, the big competition for your money is 2½%-3% on a money-market fund and 4½% in bonds. For some, there will be high-yield instruments, but that is not my milieu. In that kind of environment, a barbell approach that includes the best cyclical recoverers with the best fundamental valuations -- and that may or may not include technology, depending on your risk tolerance -- as well as good moderate growers with good yields should provide a rate of return modestly above the historical 8%-10% returns of the equity market.

Q: What are some of these total-return stocks?
A:...... And then there are REITs [real-estate investment trusts], which make up a big part of the new-high list. The new-high list is populated with preferreds, convertible preferreds, electric utilities and REITs.

Q: Anything with a yield.
A: Exactly. So rather than trying to come up with some idea and fit it to the market, why don't we just look at the market and see what it is telling us. You can put a package of REITs together, REITs with modest growth prospects but very nice yields and yields that are sustainable. Some companies we have in our portfolio include Vornado and Kimco. We've been adding to Equity Office Properties. Boston Properties is brand new for us. It's a developer of business properties, and the market has been very, very concerned about that because they have exposure not only in Boston but also in San Francisco. We think the concerns may be overdone. Each of the names I've given you has a yield of 6% or more and outlooks for growth in the 10%-plus range. They are all selling beneath net asset value.

Subscribe to WSJ & Barron's Online @ http://www.wsj.com

.....Jen

-- posted by JenL_2

Top 170. Sep 2, 2001 6:01 PM

» RhyneN - Re: Barron's Interview with Susan Byrne

In response to message posted by JenL_2:

Barry Vinocur sent a Realty Stock Review e-mail today mentioning Barron's interview. He said that out of curiosity he decided to run a 10 year comparison of the annualized total return of Varnado and Kimco against the S&P500 and Berkshire Hathaway (since Buffett got so much publicity about REITs in the Wall Street Journal last week).

He couldn't do 10 years since Kimco was listed 11/29/91. The result of his total return analysis from 11/29/91 through 8/31/01 is:

Varnado 24.7%
Berkshire Hathaway 24.2%
Kimco 20.7%
S&P500 14.3%

The better REITs have performed well in recent years, except for the 98 and 99 drop.

-- posted by RhyneN

REITs Hoping to Crash In to the S&P 500 Party

Top 171. Sep 7, 2001 9:55 PM

» JenL_2 - Re: REITs and the S&P500

More on REITs and the S&P500 from 9/7 WSJ:

By JANET MORRISSEY

Are they in or are they out? That's the question on investors' minds as they count down the final days before Standard & Poor's makes its highly awaited ruling on whether it will finally allow real estate investment trusts into the S&P 500.

A decision is expected in early October, said David Blitzer, chairman of the S&P's index committee.

Mr. Blitzer, whose eight-member committee has been aggressively seeking public comments on the proposal since April, said he's received more than 30 letters and reports, and held meetings with investment banking executives, fund managers and other industry experts on the topic.

Although some market watchers had speculated a decision would come by early September, Mr. Blitzer said he expects to issue a statement at the beginning of October. "It's not realistic" to expect a decision before then, he said.

It's been a long and arduous path for REITs that have been struggling to get into the S&P for many years.

In the past, the index has snubbed REITs, largely due to their relatively small market capitalization and illiquid nature. Some officials had described REITs as being more like closed-end funds than stocks, and some had considered the REITs' use of funds from operations as an earnings measure to be confusing for some investors.

The last time the matter garnered significant attention from the powers that be at the S&P was back in 1995 when Starwood Hotels & Resorts Worldwide Inc., which was then a REIT, acquired ITT, a company that was already in the S&P index. Starwood Chairman Barry Sternlicht was stunned when the index ruled his newly merged company wouldn't have a place in the index.

It's not clear if the reasons for his company's rejection back then were solely related to his company's REIT status. Some industry experts speculated that perturbed index officials frowned on Mr. Sternlicht's public contention that the new company would almost automatically be part of the index even though the committee hadn't yet ruled.

In any event, Mr. Sternlicht has since transformed his company into a standard corporation, which late last year was finally admitted into the index.

In general, companies added to the S&P 500 enjoy greater prestige and a surge in their stock prices. Elliott Shurgin, vice president of index services for the S&P, said companies added to the index in 2000 saw their stocks jump 10% on average between the time the company was named and the time the stock was formally added to the index. (There is generally a lag of five business days between the announcement and the time a name is brought into the index). In 2001, stocks added have advanced 4.6% on average in the week following their acceptance into the index, Mr. Shurgin said.

If REITs get the nod, observers speculate a select group of REITs stand to see big gains, at least in the short term, and the overall REIT sector could potentially enjoy greater and broader investor interest.

Banc of America analyst Lee Schalop, who helped lead this year's lobbying effort to get the issue back onto the S&P agenda, said "broader investor acceptance is the goal." Mr. Schalop, along with a team that included REIT mogul Sam Zell, Alliance Capital fund manager Tyler Smith, Morgan Stanley chief investment strategist Byron Wien and executives from the National Association of Real Estate Investment Trusts, met with S&P Index executives in April.

Much has changed in the REIT world over the past 10 years, and it's important the S&P executives know this, said Mr. Schalop.

First, market caps have been climbing. Nothing illustrated this point more than when Equity Office Properties Trust recently acquired West Coast powerhouse Spieker Properties Inc. to form a company with a total market cap of $28.1 billion and an equity market cap of $15 billion, which far exceeds many names already in the S&P 500. Mr. Shurgin said S&P names generally have equity market caps of at least $4.5 billion.

Also, many REITs, which a decade ago relied on external advisers to manage their assets, today have internal advisers and manage their own properties. As a result, many fund mangers now view REITs as operating companies, rather than simply passive owners of assets.

An IRS ruling in June seemed to back this point further when it ruled that REITs could spin off assets on a tax-free basis. The decision reversed a ruling made back in 1973, which denied such a tax-free spinoff because it didn't consider REITs to be "active" operating companies.

Public Storage Inc. President Harvey Lenkin said REITs are completely different animals than they were 10 years ago. "They're operating businesses, not just passive investors' in real estate," said Lenkin. They also do mergers and acquisitions, issue stock and have actively traded securities that behave similar to S&P stocks. He contends that recent efforts to measure REITs using earnings per share in addition to the FFO metric may bode well for REITs' acceptance by broader-market investors.

Although REITs added to the index would likely enjoy the biggest gains, others in the REIT universe would also benefit.

"Fund managers that use the S&P 500 as a benchmark can completely ignore real estate stocks right now. They're about as relevant as gold coins," said Mr. Schalop. If REITs are brought into the S&P fold, he said, fund managers would be forced to at least track and monitor REITs, even they don't immediately buy them.

S&P's Mr. Blitzer said "the game has changed in the past few years," although he declined to say which way the committee was leaning toward.

If REITs get the go-ahead, names bandied about as possible additions to the index include Equity Office, Equity Residential Properties Trust, Simon Property Group Inc., Archstone Communities Trust, ProLogis Trust and Public Storage.

Subscribe to WSJ Online @ http://www.wsj.com

......Jen

-- posted by JenL_2

Real-Estate Sector Is Expected To Suffer Less From Attacks

Top 172. Sep 24, 2001 9:47 PM

» JenL_2 - REITs - post 9/11/01

The last post of this thread was Sept 7 - only 17 days - but seems like ages ago - one day has changed America forever - but IMHO we'll come through this stronger than ever.

How have REITs held up in the aftermath of the 9/11 terrorist attacks? This from 9/25 WSJ:

By RAY A. SMITH

Several of the real-estate industry's most influential leaders are saying their business will suffer less from the Sept. 11 terrorist attacks on the World Trade Center than will other sectors of the economy.

"It is the first time in 40 years that I have been in business, where there is no excess supply, at least in the markets we are in, going into an economic decline," said Mortimer B. Zuckerman, chairman of Boston Properties, an office landlord based in Boston with a portfolio concentrated in New York City, Washington, D.C., Boston and San Francisco.

Mr. Zuckerman, along with Sam Zell, chairman of the nation's largest office and residential real-estate investment trusts; Milton Cooper, chairman of shopping center REIT Kimco Realty Corp., and Larry Siegel, chief executive of Mills Corp., a big owner of value-oriented malls, each cited limited amounts of supply, especially in the office market, as a fundamental reason why the industry will hold up better than others.

The executives maintained in a conference call arranged by Salomon Smith Barney that with supply near capacity and with banks' tighter lending standards for new projects, there is little risk of a building boom or oversupply overall, meaning companies should post solid earnings as their buildings are fully leased.

"Rents will not continue to go up, but by and large they will stabilize in most markets," Mr. Zuckerman said. "And there won't be any great economic downturn in the commercial real-estate market, at least in the markets we are in, simply because there is no excess supply."

While these executive were sending out a message of reassurance and fewer bumps on the long road ahead than other sectors, the markets were sending a radically different message.

Last week, the first full week of trading since the terrorist attacks, REITs fell, but less than the Dow Jones Industrial Average and the S&P 500 index. Monday, for the first time since the resumption of trading a week ago, all the indexes were up, but REITs rose less. In trading Monday, REITs rose 0.9%, while the Dow was up 4.5% and the S&P up 3.9%.

Mr. Zell, chairman of Equity Office Properties Trust and Equity Residential Properties Trust, based in Chicago, said the terrorist attacks combined with the slowing economy will definitely have an impact on new projects. He predicted "limited activity" in the development arena for the time being, "a significant gap in which nothing [will be] developed," which would be a good thing in terms of maintaining equilibrium of supply and demand and creating pent-up demand that could justify new construction.

Mr. Siegel, of Mills, Arlington, Va., said retailers that offer consistent values are poised to do well, as consumers attempt to make every dollar stretch. For his company specifically, he says, leasing on new developments hadn't slowed, with just one lease lost in one of the two big mall openings it has planned within the past two weeks.

All retail tenants should fare poorly in this environment, with some going bankrupt, said Kimco's Mr. Cooper, but those that are credit-worthy and have strong balance sheets should do better out of the retail group. Tenants such as supermarkets are an example he uses, and his shopping centers are anchored with grocers. Tenants with bad credit and weak balance sheets, on the other hand, could present a buying opportunity for Kimco, New Hyde Park, N.Y., he said, as the REIT specializes in acquiring distressed retail assets.

To be sure, the executives did acknowledge that some REIT sectors and some regions are in danger of being more severely affected.

Mr. Zell said the apartment sector won't suffer very much in the short term, even with massive layoffs, but could feel a greater impact in the long term. "It's naive to expect people not to double up or [move] back home," he said.

Mr. Zuckerman said he sensed the San Francisco office market is still declining, with rents that were $100 to $110 a square foot in the fourth quarter of last year now at $70. "I'm not sure we've hit bottom there," he said. "That market is one that is in difficulty."

subscribe to WSJ Online @ http://www.wsj.com

.....Jen

-- posted by JenL_2

Top 173. Oct 3, 2001 3:27 PM

» mdorsey - Real-estate investment outlook upbeat

Real-estate investment outlook upbeat

By Deborah Adamson, CBS.MarketWatch.com
Last Update: 3:55 PM ET Oct. 3, 2001

COLUMBUS, Ohio (CBS.MW) -- At a time of poor earnings visibility for many companies, real-estate stocks shine through.

Real-estate investments offer a steadier, less volatile income stream than companies in many other industries, thanks to their cadre of leased tenants, said Paul Gray, portfolio manager of Kensington Strategic Realty Fund (KSRAX: news, chart, profile).

Q. CBS.MW: What type of real estate holdings do you have?

GRAY: Our biggest holding is Annaly Mortgage (NLY: news, chart, profile), which is a mortgage REIT; our second largest is Equity Office Properties (EOP: news, chart, profile), which is the biggest office owner in the country. We're most heavily invested in (the) office (market) and we're actually looking to add in the apartment sector.

(Annaly Mortgage comprises almost 10 percent of holdings, with a year-to-date return for the fund of 69 percent.)
http://www.marketwatch.com/news/yhoo/sto...

-- posted by mdorsey

Top 174. Oct 3, 2001 5:27 PM

» jbking - Re: Re: REITs and the S&P500

In response to message posted by JenL_2:

From http://www.spglobal.com/releases/100301.... it appears a few REITs are entering the S & P 500, Mid-cap 400 and Small-cap 600 as of October 9, 2001. The S & P 500 change is because of Texaco being acquired, fyi. Equity Office Properties(EOP) is taking that place.

-- posted by jbking

REITs Fall On Rating, Estimate Cuts, Recession Worries

Top 175. Oct 3, 2001 9:25 PM

» JenL_2 - REITs Fall on Bad News

This bearish REIT article from 10/3 WSJ:

By Victoria Marcinkowski

Real-estate stocks were the latest in line to see their values drop as Wall Street grew concerned that the economic slowdown will eventually hurt a sector that has been holding up well so far.

UBS Warburg on Wednesday cut its 2002 earnings growth estimates by 3% to 5% for 35 real estate investment trusts, citing the "significantly lowered expectations" for U.S. Gross Domestic Product growth.

"In the past few weeks, economists have revised downward their expectations for an already struggling economy," said Stuart B. Seeley, an analyst with UBS Warburg.

Seeley said the firm's decision to cut earnings estimates - and reduce investment opinions - on REITs was made because the health of real estate is closely tied with the health of the economy. "Real estate will not escape a downdraft in GDP," Seeley said.

On Monday, a U.S. Treasury spokeswoman said that Secretary Paul O'Neill would tell congressional committees that he believes the U.S. economy might record negative growth in the third quarter just ended.

UBS Warburg economists said they expect the GDP number to shrink by 1% in the third quarter and 2% in the fourth quarter this year. A recession is generally characterized by two consecutive quarters of negative GDP growth.

"We expect to see a flow of bad news from the REITs," Seeley said, adding that real estate investors generally have very little patience with bad news.

All areas of real estate are likely to suffer, the analyst said. He sees the apartment REITs getting hit first, because of their dependency on short-term leases.

Manufactured home REITs will be affected the least, he said, because they represent a "low-cost housing alternative."

In spite of the slowdown in the sector, Seeley said the REITs should perform relatively well compared with other industries. "We think the dividends are secure and the fundamentals quite strong," he said.

Other analysts recently cut their estimates and investment opinions on REITs. On Tuesday, Lehman Brothers warned that the "onset of war and recession" will likely hurt REITs.

Wednesday, Salomon Smith Barney analyst Jonathan Litt cut his earnings estimates for the group - for the third time this quarter. "The news we're getting from the group is negative," Litt said, adding that the negative news from the REITs comes nowhere near the stream of warnings from other industries.

The Dow Jones equity index of real estate investment trusts was recently down 1.9%. Among the worst performers were Avalon Bay Communities Inc. (AVB), down $2.49, or 5%; Boston Properties Inc. (BXP), down $1.49, or 3.9%; and Equity Residential Properties Trust (EQR), trading down $1.78, or 3%.

Also, shares of Apartment Investment and Management (AIV) lost $1.52, or 3.4%, while Brandywine Realty Trust (BDN) traded 93 cents lower, or 4.3%. Shares of Vornado Realty Trust (VNO) lost $1.10, or 2.8%, while Post Properties Inc. (PPS) fell $1.11, or 3%.

Subscribe to WSJ Online @ http://www.wsj.com

Rhyne - if you're around - what say you? Buying op in REITs approaching?.....Jen

-- posted by JenL_2