REIT market

[Lou]

Anyone have a idea on what is going on with the REIT sector? Its basically flat to down since the Feb selloff.

[Lou]

looks like someone found value in this space, though in high end apartments, i still think boston properties is undervalued, they own citigroups corporate office in their portfolio






May 28, 2007 (AFX International Focus) --

NEW YORK (AP) - Tishman Speyer Properties and Lehman Brothers Holdings Inc. (NYSE:LEH PRN) (NYSE:LEH PRC) (NYSE:LEH PRG) (NYSE:LEH PRF) (NYSE:LEH PRD) (NYSE:GIZ) (NYSE:LEH) may soon acquire Archstone-Smith Trust (NYSE:ASN) in a deal that could be worth more than $20 billion, according to media reports late Monday.

An announcement on the acquisition of one of the country's most prominent apartment real estate trusts could come as early as Tuesday morning, the Wall Street Journal reported on its Web site.

Shares of Archstone-Smith jumped about 8 percent to $55.23 Friday on buyout rumors. Markets were closed Monday because of a holiday.

Archstone-Smith, based in Englewood, Colo., is the second-largest public apartment company based on real estate value and market capitalization. It owns 86,000 apartments in cities that include New York, Los Angeles, San Francisco, Boston and Washington, D.C.

Tishman Speyer bought New York's Stuyvesant Town/Peter Cooper Village last year for a record $5.4 billion.

Tishman Speyer is one of the leading owners and operators of real estate in the world. The company owns iconic properties including New York City's Chrysler Center and Rockefeller Center, London's CityPoint and Tower Place, Frankfurt's MesseTurm, Berlin's Sony (NYSE:SNE) Center, and other prominent properties in major European cities

[Lou]

BOSTON (Dow Jones) -- Shares of a handful of real-estate investment trusts drew upgrades Wednesday from Deutsche Bank in the wake of a deal for Archstone- Smith that led analysts to rethink their guarded stance on commercial real- estate stocks.

"After being cautious on the group the past three months as funds flows turned negative and investors pursued other alternatives, we are turning slightly more positive on the heels of the Archstone announcement," Deutsche Bank wrote in a note to clients.

Published reports that a potential deal was in the works for Archstone-Smith ( ASN) sent the apartment manager's stock higher late last week. The company on Tuesday said it's agreed to be bought for roughly $22.2 billion including assumed debt by Lehman Brothers Holdings Inc. (LEH) and Tishman Speyer.

Against this backdrop, Deutsche Bank lifted ratings on shares of eight REITs - - AvalonBay Communities Inc. (AVB) , Apartment Investment & Management Co. (AIV) , Boston Properties Inc. (BXP) , Developers Diversified Realty Corp. (DDR) , Kilroy Realty Corp. (KRC) , Kimco Realty Corp. (KIM) , Macerich Co. (MAC) and Simon Property Group Inc. (SPG) -- to buy from hold.

The analysts said the deal for Archstone-Smith, as a multifamily REIT, is important for two reasons. "First, we think it halts what we saw as the indiscriminate shorting of the stocks simply because of the subprime noise in the apartment sector or because the technicals were deteriorating," Deutsche Bank said.

Investors who sell stocks short are betting on a decline, but they can lose money quickly if the shares rally, as they're forced buy the stocks to cover their short positions and limit their losses. Meanwhile, trouble in subprime mortgages, which are designed for buyers with shakier credit histories, has sparked anxiety in the residential real-estate market.

The Archstone takeout this week "suggests that any short position is vulnerable to a privatization announcement at virtually any time," according to Deutsche Bank. The deal for Archstone approaches the size of the blockbuster going-private purchase earlier this year of of Equity Office Properties Trust, a deal valued at about $36 billion with debt.

"Secondly, if the Archstone deal goes ahead as proposed, it would generate $ 6.5 billion of recycled deal capital" -- a figure that would equal the inflows into REIT mutual funds for all of 2006, Deutsche Bank said. "Not as significant as Equity Office, but very meaningful nonetheless."

The Deutsche Bank upgrades come one day after analysts at Cantor Fitzgerald said REITs' recent pullback represents a buying opportunity.

After outpacing the stock market for several years, REITs have underperformed so far in 2007 on higher interest rates and worries the sector has gotten ahead of itself. Also, at the end of April, the yield on the NAREIT Equity Index was 3.8% and below that of the 10-year Treasury note (TNX) .

Historically, REITs' dividend yields have tended to be higher than the benchmark 10-year Treasury, leading some observers to warn the yield spread suggests the sector is overvalued.

'Large amount of buyout speculation priced in'

"Investors may have been lulled by REITs' behavior in recent years," wrote Herb Morgan, president of advisory firm Efficient Market Advisors, in a recent white paper.

"REITs have a large amount of buyout speculation priced into their shares and should be viewed with caution," he said, adding that he's reduced exposure in client accounts to a REIT exchange-traded fund, iShares Cohen & Steers Realty Majors Index Fund (ICF) .

The ETF sports a five-year annualized return of 22.2% but is slightly in the red for the year to date and trails the S&P 500 Index (SPX) by about eight percentage points, according to Morningstar Inc. data.

Commenting on the Archstone-Smith deal, Bear Stearns analysts said they see the acquisition "as a one-off equity purchase that includes management, assets and an even more valuable development pipeline."

For those reasons, "we view the transaction as a strategic, unique move by Tishman and do not necessarily think this transaction represents the beginning of a new REIT [merger-and-acquisition] wave, similar to the more than $100 billion of M&A transactions in 2006," the analysts wrote in a research note.

"On the one hand, the stocks appear pricey to the fundamentals, given a possible slowing of growth in 2008, but on the other hand there remains a tremendous amount of capital looking to invest in real estate," according to Bear Stearns.

[optimus25]

I was wondering the same thing earlier this month. I got into some MPW at $12.50 as I needed to dollar cost average after buying it at $14. I'm glad that there have been some buying in REITs in the past week.

[Lou]

I was wondering the same thing earlier this month. I got into some MPW at $12.50 as I needed to dollar cost average after buying it at $14. I'm glad that there have been some buying in REITs in the past week.


MS just bought a company today in Australia, Boston Properties is up about $7 in the last 3 days. Ive been trying to find sectors that havent run up since March.

[sealatte]

check out NLY good one.. did well about yr ago.
good management. I played this one did very well with dividends.

might want to check into Shipping companies.
DSX and FRO and SFL. research predict demand on shipping especially to China, which need raw materials to produce.. vise versa. exporting out of china.
petro shipping will increase.

plus they pay very good div... from 7-20%

my play rigth now is DSX and SFL also in on FREE(which might have potential to be like DSX)