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

Top 31. Oct 8, 1999 1:29 PM

» RhyneN - More REIT stuff

In my previous post I meant to cite Ralph Block's free column, REITWEEK
http://www.undiscoveredmanagers.com/REIT...

The 10/1 issue discusses the current situation with REITS. Is this a great buying opportunity or is the market foretelling a slide in the real estate market. Well worth reading.

-- posted by RhyneN

Top 32. Oct 8, 1999 3:34 PM

» RhyneN - Some other sites for REIT information

http://www.reitanalyst.com has some good information on a limited number of REIT stocks. It has free reports on a few stocks and about 40 stocks are analysed in its REIT Relative Vlaue Tables. This is a good place for those that might get confused by the sites that give detailed information on the over 150 equity REITS.

http://www.nareit.com has a good section for those that want to learn about REITS, called About REITS

Morningstar analyses stocks and gives letter grades in four areas- Growth, Profitability, Financial Health, and Valuation. I think these areas are especially helpful in analysing REITS. Just put the stock symbol in the quote box, and after getting the quote click on the Snapshot choice.

-- posted by RhyneN

REIT Hot Topic of the Day

Top 33. Oct 8, 1999 3:40 PM

» JenL_3 - Ralph Block on REITs

This from Ralph Block (Reitnut) at fool.com on the Real Estate message board:

.....Jen

-- posted by JenL_3

Top 34. Oct 8, 1999 4:27 PM

» RhyneN - Concluding posting on REITS

I posted today because I found this thread and saw several people saying they were trying to learn more about REITS. I learned about the sites, etc. over a couple of years and hope this can speed the learning process for those interested.

The REIT Analyst site is a pretty good place for a new learner to start looking at the numbers (after you have read about REITS at the NAREIT site). Equity REITS are classed in several groups. Some fall out of favor from time to time - right now health care REITS are out of favor because of the uncertainty of the Balanced Budget Act on medicare and medicaid reimbursement and its effect on the tenants.

Someone asked how you go about putting together a group of REIT stocks. I own 13 of the REITS in listed in the REIT Relative Value Tables at the REIT Analyst site. I picked stocks that were expected to grow (FFO growth rate) faster than the then current P/FFO ratio. Unless the P/FFO ratio changes, you can estimate your future return by adding the expected FFO growth rate to the current yield. For example, a REIT with a 7% yeild and a 10% growth rate, would return 17%, unless the P/FFO ratio changes. Of course, we are in a period where the P/FFO ratio is dropping so the current returns are not impressive.

I overweighted stocks in those REIT groups that I thought had the best chance to do well - such as offices and industrial, but chose stocks in several groups. Right now I have 9 in the office and/or industrial grouping, 7 in apartments, 3 diversified REITS, 3 in retail, 2 in hotels, and 4 in the "other" category (storage, manufactured homes, golf courses)

Since REITS can get in trouble by borrowing too much, I look at the relationship of debt (and preferred stock) to total equity (or total market cap).

Most of my picks have been pretty good, but most have dropped in value as the whole sector is out of favor and the P/FFO ratio is sliding down.

Is this a great time to buy? I hope so because I have been using this as an opportunity to do so.

Be sure and read the REITWEEK that I mentioned in a previous posting today.

-- posted by RhyneN

Top 35. Oct 8, 1999 6:28 PM

» GoodGuy - REIT info

Hi,

Just checking at the end of the day for a response to my question and boy do we have some community here. A million thanks to Rhyne and (also to Jen) for such informative posts.

I will spend my weekend studying these and will post my findings here.

- GG

-- posted by GoodGuy

Top 36. Oct 9, 1999 10:49 AM

» Oaktoad - damn good feedback

I didn't have time to do much additional and was planning to add some, but looks like someone did it first and probably better.

A couple of comments.

the nareit.com site is really quite nice. I wish that it didn't cost $900 to join, but there is a lot of free info there.

REIT funds can give you some guidance on what stocks to include. For example the site mentioned above where Ralph Block wrote has the current holdings in his fund. I don't know how current this is, but it can't be too old and gives you an idea of where to start.

I counted (quickly) and found that most funds seem to have 30-40 REITs in the holding and if you can afford to buy that many I don't see how that can hurt. Blocks fund charges 1.4% for a mgmt fee. That can add up so if you are starting small maybe that would be OK, but if you have $50K to put into this then "why".

Also, I trade thru Schwab (usually) but if you want to buy smaller amounts Ameritrade almost makes the commission diappear. I have about $70K in 13 REITs. PRT was bought not as an income play, so perhaps I really only have 12. I am looking to add to this with the dividends received from the REITs I own. A DRIP would work really well with these if you don't need the income.

HOlding them in a tax deferred/exempt (I think these are ideal for a Roth) makes sense. I hold the PRT in a taxable account as I hope to get Cap Gain treatment as well as a very high after tax dividend.

Good to see more action here. I had almost given up on this here where all the techies seem to hang out. REITs are an excellent way to diversify and perhaps Block is right and this is a buying opportunity.

-- posted by Oaktoad

Top 37. Oct 9, 1999 11:00 AM

» KirkL - Living in CA

I am leary of REITs as I've seen buildings empty for long periods of time... and one of my early poor investments was in an appartment building that was looking great until some druggies moved into the neighborhood and I broke even after taxes and several yrs of dead money...

Thus... a good site with some good information like I am reading here can educate many of us.

Keep it up.... I may join you in investing in REITs someday.

Thanks for all the great info! For now, I'll just lurk.

-- posted by KirkL