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HenryTo
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 Posted: Sun Feb 18, 2007 11:55 am Post subject: More on REITs |
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http://www.bloomberg.com/apps/news?pid=20601109&sid=arCihwuz4ocE&refer=home
| Quote: | The last time REIT dividend yields fell as far below Treasury yields was during the seven years that started in November 1978. Bond yields soared as Federal Reserve Chairman Paul Volcker increased the central bank's target interest rate to 20 percent in 1980 to combat soaring inflation.
The NAREIT index underperformed the S&P 500 during that span by 33 percentage points.
REITs in Asia and Europe also have reached records as asset prices in Japan rebounded and countries from the U.K. to Germany and Pakistan follow the U.S. in introducing property trusts.
The Bloomberg Asia REIT Index climbed 34 percent in the past 12 months and five of the 10 biggest gains were from Japan. |
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rffrydr
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HenryTo
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| Posted: Fri Aug 19, 2011 2:40 pm Post subject: |
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Chart of the Day showing recent and REIT performance going back to 2004:
http://www.chartoftheday.com/20110819.htm?T
| Quote: | | Both the US stock market and the all-important real estate market continue to struggle and investors are concerned. For some perspective, today's chart illustrates the current trend of the Dow Jones Equity All REIT Index. While REITs had been trending up for more than two years, REITs are down 15% since reaching their peak only four weeks ago. As today's chart illustrates, the recent market panic has resulted in the Dow Jones Equity All REIT Index breaking below support (green line) of what had been a 22-month upward sloping trend channel. |
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rffrydr
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| Posted: Wed Sep 08, 2010 7:44 am Post subject: |
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Interesting that old stalwart, Weyerhauser, touched all-too-closely by the building boom is now, yes, a REIT.
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HenryTo
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| Posted: Fri Apr 30, 2010 11:24 am Post subject: |
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Morningstar on Simon Property Group's 1Q earnings:
| Quote: | | We plan no immediate change to our opinion of Simon Property Group SPG following the firm's release of solid first-quarter results that exceeded our expectations in many regards. For the quarter on a year-over-year basis, our reckoning of revenue (we reclassify some items Simon includes in its reported revenue) fell 0.5%, while successfully sustained cost cuts in the areas of property operating expenses and home and regional office expenses combined with a recovery of previously charged credit losses drove a 4.3% increase in earnings before interest, taxes, depreciation, and amortization. Portfolio operating statistics were also solid, as combined occupancy at Simon's consolidated regional malls and premium outlet centers increased 30 basis points year over year to 92.8% and comparable tenant sales per square foot increased 6.6% relative to the prior year's first quarter. These results drove a 2.5% increase in same-store net operating income, placing Simon at the top of a small list of retail real estate investment trusts that have achieved positive same-store growth in the first quarter. Simon's enviable liquidity position remained largely intact at the end of the first quarter, with consolidated balance sheet cash and capacity on its revolving credit facilities totaling $6.5 billion. We continue to believe that Simon--with its premier malls and solid balance sheet--is one of the best-positioned retail REITs in the current environment. |
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HenryTo
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| Posted: Tue Mar 16, 2010 1:38 am Post subject: |
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Morningstar on REITs:
http://news.morningstar.com/articlenet/article.aspx?id=328653&pgid=stockarticle
| Quote: | | Given the magnitude of dividend cuts over the past 18 months, we expect spectacular dividend growth from some REITs in 2010. For example, mall landlord CBL & Associates (CBL) cut its common dividend three times in the past year and a half to just $0.05 per share per quarter, a level less than 10% of its peak payout of $0.545 per share. Recently, however, CBL announced a $0.20 per share common dividend, which represents a 300% increase to its depressed $0.05 per share payout, but still less than 40% of its peak level. We expect similarly eye-popping dividend increases among those stocks that suffered the most severe cuts. But for this article, we will instead focus on dividends at solid, well-run companies that we believe are sustainable and can increase at a rate greater than inflation over the medium term. |
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rffrydr
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| Posted: Fri Mar 05, 2010 6:02 pm Post subject: |
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CNBC asks: Why are REITs doing so well?
http://www.cnbc.com/id/35729120
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rffrydr
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HenryTo
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| Posted: Tue Aug 11, 2009 10:27 am Post subject: |
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Morningstar on the latest equity raising plans of the stronger REITs:
| Quote: | | The financially strong are getting stronger in commercial real estate. Two of the best-capitalized retail real estate investment trusts, Tanger Factory Outlet Centers SKT and Federal Realty Investment Trust FRT, announced further capital enhancements Monday, none of which will have an impact on our opinions of the stocks. Both Tanger and Federal Realty announced secondary share offerings of roughly $100 million in new equity. Federal Realty also announced it had sold $150 million of five-year unsecured bonds priced to yield 6.15%. Last week, retail landlo rd Simon Property Group SPG sold $500 million of five-year unsecured bonds priced to yield 5.46%, bringing the total capital Simon has raised in bond and equity offerings since March to a staggering $3.4 billion. Its cash (including capacity on its revolving line of credit) available for strategic acquisitions now stands north of $6 billion. We believe Federal Realty, Tanger, and Realty Income O are well positioned to take advantage of retail property acquisition opportunities, should they become available, although we don't incorporate the benefit of any a ccretive acquisitions into our fair value estimates. We believe these capital raises demonstrate that capital markets have improved for financially sound REITs and capital is available again on reasonable terms for REITs with sound balance sheets. We continue to believe that credit will be priced significantly higher than it was during the credit bubble for highly leveraged REITs, if it is available at all. We would not be surprised, however, if additional REITs tap the capital markets in the near term. Given the recent runup in the share prices, we think it would be prudent for some--including Macerich MAC and Pennsylvania REIT PEI--to consider issuing equity to deleverage their overstretched balance sheets. |
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HenryTo
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| Posted: Tue Jun 30, 2009 9:54 pm Post subject: |
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Morningstar on the history of REITs - and why some REITs have been paying stock dividends in lieu of cash dividends since the beginning of this year (and why this practice may end by the end of this year):
http://news.morningstar.com/articlenet/article.aspx?id=296315# |
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rffrydr
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| Posted: Wed Jan 21, 2009 9:57 am Post subject: |
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The US Architecture Firm’s billing index rose to 36.4 from 34.7 in December. The Inquiry index fell to 37.7 from 38.3.
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HenryTo
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rffrydr
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| Posted: Wed Apr 09, 2008 9:45 pm Post subject: |
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REITS confirming consumer sector bottom with lagging economic implications for others.
Howard Simon's on REITS
| Quote: | REITs Are Back in the Picture
By Howard Simons
RealMoney.com Contributor
4/8/2008 1:38 PM EDT
Click here for more stories by Howard Simons Click Here for Your FREE Report
5 Strategies for Surviving Volatile Markets
An experience known to all sellers of hedging instruments to corporate customers is the objection, "But we're self-hedged." What they really mean is that one operating subsidiary gains from, say, higher crude oil prices while another subsidiary loses. In that internal focus, they feel they are in a zero-sum game regardless of how the firm as a whole is affected.
I bring this up by my own unwitting wandering into the world of self-hedging in regards to my last column on REITs in February 2007, one week before the end of their spectacular five-year bull market (The S&P REIT index had a five-year total return of 177%; the S&P 1500 Supercomposite's total return over the comparable period was 37%). Consider the following two passages:
This is how people get trapped in bull markets: Each time you sell, you sell too soon. Each time you buy, you get rewarded. And while you know it is never really different this time, your account statement says otherwise.
...
At some point, the price of REITs will rise to a point where they no longer make sense. We have yet to see firm technical signs of higher prices being rejected, though, so we must conclude the uptrend remains intact for now.
Anyone with a REIT position over the following year can be excused for thinking the optimal REIT allocation was zero. Between when that column was penned and the low this January, the S&P REIT index had a total return of
-32%. Let's just say the signs of overvaluation were there, as they had been since 2005 at least. But the one standard to which no one should be held is clairvoyance, and that column was written two weeks before the global equity shock two weeks in the distance. That was the first rumbling that the credit crunch might be something more than just one of those worries to which everyone pays lip service and then does nothing.
Bad News, Good News
Although the consensus emerged quickly that the commercial real estate market would not be hit as badly as the residential real estate market, the sector was not immune to the credit crunch, and indicators such as the CMBX, a measure of stress in the commercial mortgage-backed securities markets, kept moving higher.
The news in general continues to be poor. There are stories about rising vacancy rates, falling rental rates, overbuilding, loan defaults and the unquestionable link between economic growth and commercial real estate demand. So imagine my surprise at seeing both retail REITs and residential REITs in the list of top 10 S&P 500 groups for the past three months.
This smelled of two things. First, if beaten-down credit-sensitive stocks are doing well -- and that's an absolute "doing well," not a relative "doing well" -- we may be at a tradable low at the very least. The second is that all REITs are not created equal. Just as we have a market of stocks and a market of commodities, not a "stock market" or a "commodities market," we have a market of REITs. This invites some detailed analysis.
REIT's Happy Medium
Click here for larger image.
Source: Bloomberg
Capitalization Matters
First, let's break REITs apart not by sector, but by size. Bloomberg maintains capitalization-weighted indices for REITs, and if we compare their total returns re-indexed to March 1995, we can see a profound and puzzling outperformance lasting for years by the mid-cap index. The five largest members of this index at present are Omega Healthcare (OHI - commentary - Cramer's Take), Extra Space Storage (EXR - commentary - Cramer's Take), Sovran Self-Storage (SSS - commentary - Cramer's Take), Saul Centers (BFS - commentary - Cramer's Take) and National Health Investors (NHI - commentary - Cramer's Take).
REIT Groups
Bloomberg also maintains REIT classifications by specialty. Thirteen groups are active at present; one -- outlet centers -- is not. How have these groups performed since the Jan. 22, 2008, market low? The total return on the Russell 3000 index of all stocks has been 4.44% over this period, and the total return for all REITs has been 16.64%.
REIT Group Performance Since Jan. 22
Click here for larger image.
http://images.thestreet.com/tsc/common/images/storyimages/040808_simon01.gif
Source: Bloomberg
The top-performing group has been self-storage REITs; perhaps it is no accident that two of the top five members of the mid-cap REIT index are self-storage REITs. This is followed by regional malls, retail, residential, shopping centers, apartments and industrial REITs.
If the American consumer is tapped out by declining asset prices -- the subject of a recent column -- and is pressured by rising energy prices and a weaker dollar, then why are the REITs related to the great American pastime of shopping doing so well?
Relatively Weak REIT Groups
Click here for larger image.
http://images.thestreet.com/tsc/common/images/storyimages/040808_simon03.gif
Source: Bloomberg
Who has been bringing up the rear? Hotels, diversified REITs, office property, warehouse-industrial and health care all have generated positive returns and have outperformed stocks, but all are below the 16.64% average return since late January.
The odd conclusion here is that REITs related to production and the facilitation of production, such as offices, warehouses and hotels, are laggards. REITs related to consumption, all those retail-related groups, are leaders. Paddy Bauler, a mid-20th-century Chicago alderman, famously said, "Chicago ain't ready for reform." Neither, apparently, is the American consumer.
Long-Term View
If we go back to November 1996 and compare the long-term total returns of REIT groups, we can divide them into three categories: the underperformers, the strong performers and the very strong performers. Hotel and health care REITs have been underperformers for years, as has been the manufactured homes group. Incredibly, investors in double-wide trailers have done better for themselves than have investors in overpriced hotels.
Relatively Strong REIT Groups
Click here for larger image.
http://images.thestreet.com/tsc/common/images/storyimages/040808_simon04.gif
Source: Bloomberg
The strong performers include what most of us think of when we think of REITs, offices, apartments, shopping centers, retail ... and those creep-me-out self-storage centers. These groups were hit quite hard in last year's downturn.
Tellingly, office REITs have been slowest to rebound; the five largest REITs in this category include Boston Properties (BXP - commentary - Cramer's Take), SL Green (SLG - commentary - Cramer's Take), Alexandria Real Estate (ARE - commentary - Cramer's Take), Mack-Cali Realty (CLI - commentary - Cramer's Take) and Highwoods Properties (HIW - commentary - Cramer's Take). If the economy worsens markedly from here, this group's relative weakness is likely to deepen.
Relatively Very Strong REIT Groups
Click here for larger image.
http://images.thestreet.com/tsc/common/images/storyimages/040808_simon05.gif
Source: Bloomberg
Finally, the very strong outperformers include regional malls, industrials, warehouse-industrials and residential. Given the comments above about the relative performance of consumption- vs. production-related REITs, we must emphasize that this ranking encompasses more than 11 years, not just two months.
There are two important points regarding the strength of the warehouses and industrials. First, the rise of just-in-time inventory management placed an emphasis on highly automatic distribution systems. Second, the increasing share of the American economy involved in foreign trade has made these groups sensitive to currency fluctuations and global economic conditions as well as to U.S. economic health.
An abrupt change in American trade policies could damage these facilities, which are critical components of supply chains extending back to China, Mexico and other exporters. The warehouse-industrial REIT group is largely a two-firm show -- ProLogis (PLD - commentary - Cramer's Take) and AMB Property (AMB - commentary - Cramer's Take).
Your optimal allocation to REITs is greater than zero; most models have it as somewhere between 5% and 10% of your portfolio. They are demonstrably and maddeningly different in risk and return characteristics from other conventional assets, and as Roger Ibbotson demonstrated years ago, only common stocks outperform real estate over a long period of time. |
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rffrydr
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| Posted: Thu Mar 20, 2008 1:26 pm Post subject: |
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This, that most popular institutional hedging (and speculating) vehicle, SRS never got close to jan bottom and was quick to pull out last week. This ETF features that bugaboo, leverage...something the market is clearly loosing its taste for
http://stockcharts.com/h-sc/ui?s=SRS&p=D&b=5&g=0&id=p51340164119
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rffrydr
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| Posted: Thu Mar 20, 2008 7:02 am Post subject: |
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rffrydr
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| Posted: Tue Mar 11, 2008 7:48 am Post subject: |
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Appetite for RE still there. Way back when RE was part of the inflation story.
http://www.ft.com/cms/s/0/5d8df1aa-e875-11dc-913a-0000779fd2ac.html
| Quote: | | “People say expectations of return for core US real estate are lower, for as long as the next five years,” he adds. “But we weren’t investing for returns – we wanted diversification and inflation protection. So even if we earn returns of 6 or 7 per cent, we’re not going to change the construct of our programme.” |
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