Reggie Middleton's CRE Short List, Part 1

Reggie Middleton's picture

Here is the short list of REITs that I have been promising subscribers for the last week: Commercial Real Estate Shortlist 11-2009 Commercial Real Estate Shortlist 11-2009 2009-11-16 04:20:04 530.98 Kb.
I plan on releasing a full forensic report this week (providing it
passes the QA check before Friday) which will actually include property
level analysis (for Pro subscribers) of the REIT in question's entire portfolio. The "pre"short list of REITs examined are available to non-subscribers below.

Over two years ago I forecasted a land recession in this country. I
featured the work of a guest blogger whom I respect and I believe this
is a very good time to rehash what was said in Straight Talk From the Homebuilder CFO: The Coming Land Recession, Pt I and Straight Talk From the Homebuilder CFO: The Coming Land Recession, Pt II. Due to space constraints, I will actually repost these as separate articles.

For those who are just starting to follow round two of my commercial
real estate analysis, this is what has led us to this point:

japanese_land_vs_gdp.jpg

This really calls into question the usefulness of broad GDP reports in
anticipating asset value recovery after a land bubble bust. See "Who are ya gonna believe, the pundits or your lying eyes?" (for pictures), "Who are you going to believe, the pundits or your lying eyes, part 2" (for numbers and a very shaky video), and Boo!!! Will Halloween Scare the Market into Respecting the Fundamentals? for an idea of what needs to be cleared up in this space before we move forward.

I will also be looking a little deeper into Realty Income in December.
I have found some info on their closely "guarded" real estate
portfolio, which may allow me to perform a realistic valuation. Chances
are things will not appear as rosy as management makes them out to be,
but we shall see.

 In
order to truly appreciate the Japanese comparison, one would really
needs to understand the condition of the US banking environment:

Ssubscribers only) Obsservations on Realty Income as well as inclusion of several 3rd party analysis 2009-11-16 02:31:35 384.50 Kb

Of the list of REITs analyzed below, we have:

  1. removed 4 REITs with no real estate investment (involved in
    investing primarily in mortgage backed securities, which we will pursue
    at a later date);
  2. removed 7 REITs with LTV of less than 30%
  3. and selected 11 REITs based on the leverage metrics and operational performance.

One REIT that ended up on the shortlist actually had a few significant
positives that would not show up on a Bloomberg scan. These positives
have the potential to cause it to stand out as a potential long
candidate in what I see as a maelstrom of under-performance in the REIT
sector over the medium term. It is included in the shortlist note for
subscribers (Commercial Real Estate Shortlist 11-2009 Commercial Real Estate Shortlist 11-2009 2009-11-16 04:20:04 530.98 Kb).

 

Initial list of 59 REITs with share price of $15 per share and market cap of more than $500 mn

       

Ticker

Short Name

Price

Current Market Cap

SPG US Equity

SIMON PROPERTY

68.8

19492

PSA US Equity

PUBLIC STORAGE

74.37

12820

VNO US Equity

VORNADO RLTY TST

60.5

10857

NLY US Equity

ANNALY CAPITAL M

17.16

9341

HCP US Equity

HCP INC

30.12

8828

BXP US Equity

BOSTON PROPERTIE

62.34

8639

EQR US Equity

EQUITY RESIDENTI

29.11

7975

VTR US Equity

VENTAS INC

40.22

6296

AVB US Equity

AVALONBAY COMMUN

73.28

5858

HCN US Equity

HEALTH CARE REIT

45.03

5453

FRT US Equity

FED REALTY INVS

59.22

3608

DLR US Equity

DIGITAL REALTY

45.76

3484

NHP US Equity

NATIONWIDE HLTH

32.48

3467

LRY US Equity

LIBERTY PROP

30.83

3442

AMB US Equity

AMB PROPERTY

23.39

3421

SLG US Equity

SL GREEN REALTY

41.81

3212

MAC US Equity

MACERICH CO

30.62

2901

REG US Equity

REGENCY CENTERS

35.8

2874

CLI US Equity

MACK-CALI REALTY

32.33

2533

SNH US Equity

SENIOR HOUSING

19.8

2514

HPT US Equity

HOSPITALITY PROP

20.32

2506

O US Equity

REALTY INCOME

23.8

2482

ARE US Equity

ALEXANDRIA REAL

55.21

2431

WRI US Equity

WEINGARTEN RLTY

20.09

2407

CPT US Equity

CAMDEN PROP TR

36.71

2354

ESS US Equity

ESSEX PROPERTY

77.17

2176

OFC US Equity

CORP OFFICE PROP

36.05

2091

HIW US Equity

HIGHWOODS PROP

29.3

2076

TCO US Equity

TAUBMAN CENTERS

33.26

1767

NNN US Equity

NATIONAL RETAIL

21.07

1701

WRE US Equity

WASH REAL ESTATE

26.9

1567

BRE US Equity

BRE PROPERTIES

28.68

1515

SKT US Equity

TANGER FACTORY

37.05

1492

ALX US Equity

ALEXANDER'S INC

285.48

1458

ELS US Equity

EQUITY LIFESTYLE

46.21

1401

ACC US Equity

AMERICAN CAMPUS

26.71

1394

EQY US Equity

EQUITY ONE INC

15.77

1361

HME US Equity

HOME PROPERTIES

39.86

1317

OHI US Equity

OMEGA HEALTHCARE

15.42

1284

HR US Equity

HEALTHCARE RLTY

20.95

1244

MAA US Equity

MID-AMERICA APAR

43.57

1230

LHO US Equity

LASALLE HOTEL PR

19.36

1230

PSB US Equity

PS BUSINESS PARK

49.73

1210

EPR US Equity

ENTERTAINMENT PR

34.15

1194

KRC US Equity

KILROY REALTY

26.3

1135

PCH US Equity

POTLATCH CORP

28.31

1126

HTS US Equity

HATTERAS FINANCI

27.47

990

STWD US Equity

STARWOOD PROPERT

20.23

984

EGP US Equity

EASTGROUP PROP

37.21

966

SSS US Equity

SOVRAN SELF STOR

30.68

842

NHI US Equity

NATL HEALTH INV

30.18

833

PPS US Equity

POST PROPERTIES

16.76

812

DFT US Equity

DUPONT FABROS TE

15.46

645

AKR US Equity

ACADIA REALTY

15.88

630

GTY US Equity

GETTY REALTY

24.71

612

BFS US Equity

SAUL CENTERS INC

31.67

567

LTC US Equity

LTC PROPERTIES

23.5

545

AGNC US Equity

AMERICAN CAPITAL

28.14

544

GOV US Equity

GOVERNMENT PROPE

23.74

509