Housing Bubble and Real Estate Market Tracker

by: Judy Weil

Judy Weil submits: Here's our summary of articles and data points on the housing market. It's part of Seeking Alpha's coverage of the real estate market and homebuilder stocks. Like all other topics and stock coverage from Seeking Alpha, you can have this sent to your Blackberry or desktop email by signing up for our no-spam free email subscription service.

Quote of the Day- "From the House's Mouth"

"While there is no basis for predicting a recession right now, the risks have surely gone up. The combination of softness in the housing sector, contractions in credit, increased uncertainty and volatility, and losses in wealth make the chances significantly greater now.''- Former Treasury Secretary Lawrence Summers, now a professor at Harvard University in Cambridge, Massachusetts. (Bloomberg, Sept. 4th)

Real Estate Sales and House Prices

  • U.S. Economy: Pending Home Sales Plunge 12.2%, Most on Record (Bloomberg, Sept. 5th): "The number of Americans signing contracts to buy previously-owned homes plunged in July by the most since records began in 2001… The National Association of Realtors' index of signed purchase agreements dropped 12.2% after gaining 5% in June. The decline was more than five times the median forecast of economists… for a decrease of 2.2%… Lawrence Yun, NAR senior economist: "Our members are telling us some sales contracts aren't closing because mortgage commitments have been falling through at the last moment. There are continuing issues for subprime borrowers, but there are no serious problems for the majority of buyers who qualify for conventional financing.''

  • Home Prices Grow At Slowest Pace In 12 Years (Inman News, Sept. 4th): "Freddie Mac's Conventional Mortgage Home Price Index "Classic Series": Home-price appreciation slowed to an annual rate of 0.4% during Q2, the slowest quarterly growth rate in more than 12 years… [The index] excludes homes with nonconforming mortgages of more than $417,000 [and] draws on data from home sales and mortgage refinancing [appraisals]… Home values appreciated 3.3% on average for the 12 months ending in June, compared with 10.2% growth during the same period a year earlier… Year-over-year appreciation in the purchase-only index amounted to just 2.5%, down from 8.4% for the 12 months ending June 2006 and the index's slowest annual rate of growth in 14 years… Q2 sales of single-family homes [were] at an annualized rate of 6.03 million units, down from 6.49 million in Q1 and 6.89 million units a year ago."

  • Toledo, Ohio: Prices Low, Getting Lower (USA Today, Sept. 4th): "Toledo has been hit by job losses, home foreclosures and a housing market slowdown… Monthly sales are down 8.7% from year-ago totals and the median price has slipped 7.4%. Real estate agent Mark Kruse: The number of homes for sale has climbed to an unusually high 9,700 in the Toledo area… Last year, there were 4,000 homes in foreclosure in Lucas County, where Toledo is based. This year, it could exceed 5,000, Kruse says… One bright spot: The city is experiencing some new construction. There's a new open-air mall called Fallen Timbers. A sports arena is being built downtown."

Affordability Still an Issue

  • Study: Home Prices Going Through Roof (Chicago Tribune, Sept. 4th): "DuPage Homeownership Center annual Labor Day Housing Affordability Index: Families with an annual median income of $69,800 should be able to afford a median-price, single-family home, but in DuPage County… that income could support a home priced at $200,000. And few of those homes are available in DuPage, real estate agents say. The DuPage median income is only 55% of what's needed to buy a median-priced $360,000 house in the county… [With] typical down payment and mortgage rates, it would take an income of at least $126,120 to buy a $360,000 median-price home."

Real Estate Investing and Sentiment

  • Can't Sell Your Home? Be A Landlord (CNN Money, Sept. 4th): "The inventory of homes for sale is twice as big as it was three years ago… and home prices [are] flat - or worse… The rental market [however,] is robust. National Association of Realtors: Rents were up 4.1% in 2006. [But there are pitfalls]. Live in your house for two of the five years before you sell and you'll pay no taxes on the first $250,000 in profits ($500,000 for a married couple). But become a landlord for three years or longer and you'll owe capital-gains taxes on all profits in your home since you bought it."

  • Hardest-Working Saint In Real Estate (CNN, Sept. 4th): "The trend of burying St. Joseph [to help sell homes] has caught on. Phil Cates' online retail site, StJosephStatue.com, offers the "Underground Real Estate Agent" home-selling kits. For $9.95, the 4-inch statue comes with a burial bag and a burial instruction booklet… Cates: Sales have increased 100% in the past two years… Jan Wheelehan, store manager at a Catholic retail supply store… says the statues have been one of the better sellers, with sales increasing 25% this year: "People seem more panicked." There are [also] dozens of St. Joseph home-selling kits on Ebay."

  • TV Home Shows Thrive Even In A Down Market (AZ Central, Sept. 4th): "Unlike the real estate market, the bubble for [house fix-up and flip] shows hasn't burst just yet. "Flip This House" and "Flip That House " continue to be among the most popular shows on A&E and TLC, attracting such major advertisers as Home Depot, General Motors, MasterCard, Coca- Cola, Verizon, Aflac Insurance and Campbell's Soup. In 2006, TLC took in nearly $4 million in advertising revenue for commercial time on "Flip That House." The hour-long "Flip This House" on A&E… raked in $9.3m in ad revenue last year, Nielsen estimated. During H1'07 A&E has collected nearly $10m for commercial time on the show."

Mortgates and Real Estate Lending

  • MGIC Investment and Radian Group Terminate $4.9B Merger (Steven Towns in Seeking Alpha, Sept. 5th): "Mortgage insurers MGIC Investment Corporation and Radian Group Inc. jointly announced early Wednesday that they have agreed to terminate their pending $4.9 billion merger. MGIC had agreed to acquire Radian in February in a stock swap. As of Tuesday's market close, MGIC and Radian shares have fallen 57% and 73%, respectively, since peaking in February on the merger announcement. The companies cited "current market conditions," which "have made combining the companies significantly more challenging." They agreed to withdraw all outstanding litigation and their joint press release said neither party made a termination payment.

  • Freddie Mac To Issue 4 Bln Usd In New Securities This Week (Forbes, Sept. 4th): "Mortgage giant Freddie Mac (FRE) said today it would issue $4 billion in new securities this week: A $3b five-year Reference Notes security, and a $1b reopening of another two-year security. Freddie said both issues would be priced on September 6 and settle on September 7. Freddie buys residential mortgages and mortgage-related securities, financed by its issuance of mortgage-related securities and other debt instruments. Both Freddie and Fannie Mae (FNM) are permitted to hold a portfolio of securities, and [many] Congressman want to expand their ability to hold securities in order to increase liquidity in the troubled mortgage market."

Subprime Fallout

  • First American to Cut 1,300 Jobs as Home Sales Slow (Bloomberg, Sept. 4th): "First American Corp. (NYSE:FAF), the largest U.S. title insurer, said it would eliminate 1,300 jobs this quarter, or about 3% of its workforce, as a slowdown in the U.S. housing market crimps sales. Combined with 600 jobs it cut in Q2, First American expects to lower expenses by $108m/year… [Weak home sales has] reduce[ed] demand for title insurance, which protects homebuyers from claims against their ownership of a property. The coverage is required by most banks before agreeing to issue a mortgage… First American said it's considering moving some jobs to other countries because of "rapidly changing economic conditions.''

  • NovaStar Cancels Preferred Offering, Cuts Jobs (Roy Mehta in Seeking Alpha, Sept. 4th): "NovaStar Financial announced it has canceled a $101 million convertible preferred stock offering after its auditor, Deloitte & Touche, would not agree to the plan unless specific parts were changed to reflect the increase in risk [such as] including a "going concern" clause… a warning to investors about the company's financial stability… The company was leaning on the deal to survive the recent downturn… With the deal canceled, the company announced it would close 12 offices and cut about 275 jobs in the retail lending area… The lender has laid off 83% of its workforce since 2004."

  • NovaStar's Dividend Woes (Herb Greenberg in Seeking Alpha, Sept. 4th): "With NovaStar's (NFI) cancellation of its $101 million rights offering… How will it pay $157 million in 2006 dividends, which must be… paid by year end? Without paying the dividend, NovaStar will be on the hook to the IRS for unpaid taxable income for last year… NovaStar, is [already] low on cash relative to its obligations. The company, which is pretty much exiting the lending business, tried to put a positive spin on the news by saying it will spend the bulk of its time managing its current $15 billion securitized loan portfolio while looking for "strategic alternatives" for its loan-servicing portfolio."

  • Banks to Test Debt Market This Week (NY Times, Sept. 4th): "Lehman Brothers Holdings (LEH), [has] exposure to $15.6 billion [in financing committments], Bear Stearns (NYSE:BSC) [has] $8.8b… Goldman Sachs Group (NYSE:GS), [has] $20.4b… Part of First Data Corporation/KKR's $24b offering's [this week]… include so-called covenant-lite loans, which place few restrictions on how much debt the company can assume, and… bonds that can be repaid by issuing more notes. Since July, investors have rejected both… forcing banks to restructure or withdraw offerings… Others [are seeing] an opportunity to profit from the drop in debt prices — including private equity players. With financing commitments having dried up recently, firms like Kohlberg Kravis, the Blackstone Group and Apollo Management have turned to buying buyout-related debt at a discount."

  • Accredited Declares Preferred Dividend (Forbes, Sept. 4th): "Subprime mortgage lender Accredited Home Lenders Holding Co. (LEND) said Tuesday it declared a quarterly cash dividend of about $0.61/share for preferred shares of subsidiary Accredited Mortgage Loan REIT Trust. The dividend will be paid on Oct. 1 to shareholders of record as of Sept. 14. Accredited recently filed a lawsuit against Lone Star Funds to force the private equity firm to purchase the company at its initial offer [of] $15.10/share, or $400 million. Following the subprime fallout, Lone Star told the mortgage lender in late August it wanted to pay $8.50/share for the company."

  • Most A.R.M. Borrowers Select Fixed-rate Mortgages on ReFi (Cape May County Herald, Sept. 4th): "Freddie Mac announced last week that in Q2'07, 85% of borrowers who originally had a one-year adjustable-rate mortgage chose a new fixed-rate mortgage when they refinanced and 86%of borrowers that initially had a hybrid ARM refinanced into a fixed-rate loan as well. The comparable numbers in Q1 were 89% and 88%, respectively. Amy Crews Cutts, Freddie Mac economist: "Mortgage rates on 30-year fixed-rate loans went up in Q2 to 6.4%, while rates on one-year Treasury-indexed ARMs were 5.5%… The widening spread between fixed- and adjustable-rate mortgages in Q2 made ARMs a bit more attractive than they had been."

  • NovaStar Auditor Raises Doubt About Lender's Survival (Bloomberg, Sept. 4th): "NovaStar Financial Inc. (NFI), the home lender trying to outlast an industry shakeout by conserving cash… now plans to focus on managing its portfolio of securitized residential loans, which was $15.5 billion as of June 30…Thornburg Mortgage Inc. (TMA), a home lender focused on borrowers with good credit, bolstered its finances today by completing a $1.44b sale of mortgage-backed bonds. Thornburg stopped taking loan applications last month after running short of cash."

  • Wall Street Hiring Machine Goes Idle (MarketWatch, Sept. 3rd): "Hiring has slowed or seized up at many firms including Lehman Brothers Holdings Inc. (LEH) and Citigroup (NYSE:C) where 17,000 job cuts were announced in the spring. And more layoffs loom in many areas in the investment- banking industry in the wake of the August credit crunch, particularly in businesses such as credit trading and structured products, analysts and job recruiters predict. At the very least, bonus season looks a lot tougher this year on Wall Street and in The City in London… Growth has stalled as the credit and deal-making markets have ground to a halt."

Foreclosure Impact

  • Credit Card Companies Woo Struggling Mortgage-Holders (Boston Herald, Sept. 4th): "Mintel International Group: Direct mail credit card offers to subprime customers in the US jumped 41% in H1'07, vs. H1'06. Direct mail offers targeted at customers with the best credit fell more than 13%. Yet, during this same period, defaults on subprime mortgages… rose significantly. Mortgage data analyzer First American LoanPerformance: In June, nearly 1 in 5 subprime mortgages were at least 60 days past due, and more than 1 in 20 were in foreclosure. Julie Lizer, Mintel's manager of custom research: Customers can no longer refinance and tap into home equity for cash, [leaving] credit cards as their only option."

  • Mortgage Help Bills Moving Along Slowly (Columbia Tribune, Sept. 4th): "Don’t look for Congress to help to get out of a bad subprime mortgage anytime soon… "We may have as many as 1 million to 3 million people who could lose their homes… because they got bad deals on mortgages," said Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking, Housing and Urban Affairs Committee. House and Senate lawmakers are working on different plans to help Americans out of the mortgage crisis, none of which seems ready for… signing by President Bush. Dodd acknowledged as much last week as he urged the White House to take action despite all the mortgage-related legislation his committee has planned for the fall."

  • Foreclosure Fallout: Block by Block (Denver Post, Sept. 4th): "Metro Denver's Your Castle Real Estate survey: In the Goldsmith neighborhood… just 4% of homes sold last year were short sales — where a lender accepts the sale of a property for less than is owed on it — or foreclosures, and values increased 37%. The average price of a home is $438,000… Del Mar [was] hit hardest by skyrocketing foreclosures and plummeting home values… In the past year, 71% of the 91 homes sold in Del Mar were either foreclosures or short sales… While the foreclosure rate in Jefferson Park is high, average home prices are nonetheless rising at a rapid clip."

Global Impact and Alternatives To The Housing Slump

  • Swiss Hawk AG and Deutsche European Real Estate Plc to Launch two Real Estate Funds (PR Newswire, Sept. 4th): "Swiss Hawk AG [and] Deutsche European Real Estate Plc [are] launching two real estate investment funds to be listed on the Frankfurt Market before the end of 2007. Swiss Hawk AG has agreed to provide seed-finance, to arrange for the new funds to be listed on the Frankfurt Market [and to] fundraise for the two real estate funds through institutions and private equity investors… [The] Hanseatic & Baltic Fund [will] invest in suitable commercial and residential real estate in the Hanseatic and Baltic regions. Deutsche Residential Fund [will] invest in high quality residential real estate in selected areas throughout Germany."

  • CalPERS May Up Foreign Real Estate Allocation (Globe St., Sept. 4th): "The California Public Employees Retirement System is considering a significant increase in international real estate investments. On the advice of PCA Real Estate Advisors, the staff of CalPERS Investment Committee is recommending that its international real estate allocation be bumped from 20% of its total real estate allocation to 50%... from approximately $4 billion to approximately $10b… International fundamentals appear more attractive compared to the US on a relative basis and, two, they agree that CalPERS portfolio should better reflect the fact that the US represents only 20% of the global GDP and 30% of the global real estate market."

  • Subprime Scare, Foreign Suitors Fuel Calls For German Bank Tie-Ups (AFP, Sept. 4th): "Leading German finance and banking figures are pushing sector consolidation in the wake of the US subprime housing market crisis and possible takeover threats from abroad… Two groups, regional bank SachsenLB and IKB, which specializes in lending to small businesses, were heavily exposed to defaults in the US high-risk home loan sector and [were helped] by other German banks. Finance Minister Peer Steinbrueck underscored the occasion provided by domestic market turmoil to consolidate the sector, a recurring theme in light of Germany's fragmented financial landscape: "German banks also need to protect themselves against hostile takeovers, from foreign hedge funds for example."

  • Synapse Shuts Fund Because of Market 'Illiquidity' (Bloomberg, Sept. 4th): "Synapse Investment Management LLC, the hedge-fund manager that oversaw money for German bailout recipient Landesbank Sachsen Girozentrale, shut one of three fixed- income funds because of "severe illiquidity'' in the market. The Synapse High Grade ABS Fund was closed and some assets have been sold, said co-founder Mark Holman. The fund's main investor was SachsenLB… Holman said the fund had no investments in U.S. subprime mortgages. Holman: "We are going to look at starting new funds. There are enormous opportunities in the ABS market caused by this enormous deleveraging and we intend to return with a fund that can exploit them.''

  • Plaza Centers to Invest 50 Billion Rupees in India (Bloomberg, Sept. 3rd): "Plaza Centers NV, the developer of malls controlled by Israel's Elbit Medical Imaging Ltd., plans to invest 50 billion rupees ($1.2 billion) in India to build entertainment and commercial centers. The company will develop 50 properties in 5-7 years [and] will construct the malls in cities such as Bangalore and Pune. Plaza is investing in India's real-estate market as economic growth puts more money in the hands of Indians, fuelling demand for shopping malls and entertainment centers. The country's real-estate development market is forecast to increase to $90b by 2015 from $12b in 2005, Moody's Investors Service said in June."

  • Irish House Price Survey Down Yr/Yr For First Time (Reuters UK, Sept. 3rd): "The average price paid for a house in Ireland fell 0.4% last month to €301,267 ($411,500), the permanent tsb/ESRI house price index showed on Monday. That is 3.0% lower than at the start of 2007 and 0.7% below where prices stood a year earlier, the first year-on-year drop since the survey began in 1996. However, the monthly fall was the smallest since prices began to decline in March with their first contraction in over five years. July's numbers compared with a 0.5% drop in June when house prices were still 0.9% higher on an annual basis."

Macro Impact, And Will The Housing Slump Cause A Recession?

  • Legendary Forecaster of the Subprime Crises Passes Away (Default Servicing News, Sept. 4th): "Financial commentator and predictor of the subprime fallout Dr. Kurt Richebacher has passed away, leaving behind a legend of accurate economic predictions—including a warning back in 2001 that the housing boom would eventually go bust… In 2001, Dr. Richebacher described the expanding housing market as more of a liability than an asset… Dr. Richebacher [left] the world with one final prediction: “The housing bubble - together with the bond and stock bubbles will invariably implode in the foreseeable future, plunging the U.S. economy into a protracted, deep recession.”

  • Construction Spending Plunged in July (Yahoo! Finance, Sept. 4th): "The Commerce Department: Construction spending dropped 0.4% in July, compared with June, the weakest showing since a 0.6% fall in January. It was a bigger drop than economists had been expecting… Housing activity fell by 1.4%, more than double the 0.6% decline in June, and has now declined for a record 17 straight months… Weakness in housing was offset somewhat by strength in nonresidential building which rose by 0.4% in July to an all-time high of $346 billion at an annual rate. Construction of shopping centers, office buildings and hotels… state and local government projects all showed increases."

  • Merrill Cuts Estimates on Banks, Says 60% Chance of Recession (Seeking Alpha, Sept. 4th): "Merrill Lynch analysts dropped their earnings estimates Tuesday for 12 large-cap regional U.S. banks -- including Bank of America, Wachovia and Wells Fargo -- over concerns relating to current economic conditions in the U.S. Wachovia's EPS target was lowered to $4.90 from $5.05, BofA's was reduced to $5.10 from $5.25, and Wells Fargo's was cut to $2.95 from $3.00... Merrill analysts Edward Najarian, Brian Bedell and Dwain Carryl said the probability of a U.S. recession is now 65%. The Fed will cut its Fed Funds rate by 50 basis points at the upcoming FOMC meeting on September 18, and a total of 100bps by year-end, yet unemployment will rise from a current 4.6% to 4.9%."

  • Deutsche Bank Chief Says Markets Are Stabilizing (Bloomberg , Sept. 4th): "Deutsche Bank AG Chief Executive Officer Josef Ackermann said financial markets are stabilizing after central banks pumped more than $200 billion into the world's money markets. "I am optimistic about the environment globally for financial institutions,'' Ackermann said Tuesday a month after the bank described markets as "very challenging…'' Ackermann said "turbulent market conditions'' in August crimped the value of holdings in the sales and trading division, which accounts for about half of revenue. UBS analysts cut their 2008 earnings estimates for European banks including Deutsche Bank by 5% Tuesday, citing the rout in the [credit] markets."

  • Why California Housing Matters (MarketWatch, Sept. 3rd): "Stephen Levy, senior economist at the Center for Continuing Study of the California Economy: Why should non-Californians care about the California housing market, especially when the S&P/Case-Shiller Home Price Index shows year-over-year increases in such cities as Charlotte, N.C., Portland, Ore., and Seattle? Because the Golden State accounts for 13% of the country's gross domestic product or the total value of all goods and services produced nearly double the No. 2 contributor, New York. That means that… the impact of slow economic growth, or even recession, in the state will ripple through the rest of the country."

Homebuilders And Housing Stocks

  • Home Depot/Lowe's Pair Trade - Hedged Opportunity For Housing Despair (Elias Tsepouridis in Seeking Alpha, Sept. 4th): "As the blood runs in the streets for the housing market, the current Home Depot (NYSE:HD)/ Lowe's (NYSE:LOW) pair trade offers your portfolio a hedged opportunity… This is a good opportunity to enter in a pair trade up to the pair ratio reaches the mean analyst price target of 0.873 ratio… Buy 322 shares of LOW at $31.06 = 10,001 Sell Short 261 shares of HD at $38.31 = 9,999 This is a cash neutral hedge with the cash outflow on the LOW purchase and the inflow on the HD short sale. If this trade is successful, it will provide a +4.1% return after commissions."

  • Home Depot's 'Dutch Auction' Leaves Investors Disappointed (CNN Money, Sept. 4th): "Shares of Home Depot (HD) retreated nearly 5% as the home-improvement retailer reported disappointing preliminary results from its "Dutch auction" tender offer. Home Depot (HD) said 289.6 million shares -- roughly 14.6% of the total outstanding -- were validly tendered… at a price of $37, for a total of about $10.7 billion... That represented the bottom of its targeted price range of $37-$42. The shares expected to be purchased included 250 million that the company initially offered to buy, coupled with 39.6 million others which it elected to purchase… Proceeds from the disposal have been earmarked for a $22.5 billion recapitalization plan that the company announced in June."

  • Real Estate Stocks Report Sad Results (Inman News, Sept. 4th): "Roth Capital upgraded IndyMac bank's (IMB) rating from "sell" to "hold," and 600 employees reportedly were hired from bankrupt American Home Mortgage… IndyMac resumed origination of some jumbo home loans… and traded its first mortgage bonds, in two packages worth $240 million and $350m, in five weeks… ZipRealty (NASDAQ:ZIPR) announced a 16% increase in Q2 revenues from $27m last year to $31m this year, but the company's quarterly loss widened from $200,000, or $0.01/share, for Q2'06 to $1m, or $0.05/share, for Q2'07… Despite the positive contributions of IndyMac, Freddie Mac and ZipRealty, the Inman Housing Stock Index collectively lost 2% in August and has fallen more than 27% this year."

Commercial Real Estate and REITs

  • Commercial Real Estate in U.S. Poised for 15 Percent Price Drop (Bloomberg, Sept. 5th): "U.S. commercial real estate prices may fall as much as 15% over the next year... as rising borrowing costs force property owners to accept less or postpone sales… Real Capital Analytics Inc.: Investors in July bought the fewest commercial properties since August 2006 and apartment building acquisitions were down 50% from June. Archstone-Smith Trust in August postponed its $13.5 billion sale to Tishman Speyer Properties… Cushman & Wakefield Sonnenblick Goldman: Six months ago, a 30-year commercial loan with 5-10 years of interest-only payments would have cost the borrower about 120 basis points more than the yield of the 10-year Treasury note. A similar loan would now cost about 160-200 basis points more than the 10-year Treasury's yield of 4.6%."

  • CDOs? OMG! (Slatin Report, Sept. 4th): "Gary Gabriel, executive director, Metropolitan Area Capital Markets Group of Cushman & Wakefield’s East Rutherford, NJ, office. “If you own part of a Commercial Real Estate CDO today, it’s on your books, and it’s hard to know when you’ll be able to sell it.” Dan Fasulo, a partner with Real Capital Analytics: [Eventually], there will be clarity about costs and risk once again, and investment capital will start to flow, reviving real estate securitization… During H1'07, investors raised “record” amounts of capital, most of which hadn’t been allocated by the time the subprime meltdown gave the markets the willies. Fasulo: “Capital has to be placed eventually."

  • German Firm Plans $20M Solar Power Plant (Globe St., Sept. 4th): "Epuron LLC, the US subsidiary of Hamburg, Germany based-Conergy AG, has leased 16.5 acres from Waste Management Inc. with plans to build a $20-million solar power facility. The land is adjacent to Houston-based Waste Management’s Grows landfill in Morrisville... Exelon Generation Co. LLC, the parent of Philadelphia’s Peco Energy, has signed an agreement to buy the facility’s output for 20 years. Exelon will sell it wholesale to PJM Interconnection LLC, which is the Norristown-based regional transmission organization that coordinates the movement of wholesale electricity across 13 states."

  • Duke Realty's No. 2 Exec Key To REIT's National Push (Indystar, Sept. 3rd): "Duke is a REIT that develops, operates, leases and sells commercial real estate… Duke Realty (NYSE:DRE) has [expanded] nationally in recent years. David Fick, analyst with Stifel, Nicolaus: Duke holds a large inventory of undeveloped land. The company often constructs office buildings before finding tenants -- a practice that could prove risky if demand falls… Over the past five years, Duke's stock price and dividend payout have given shareholders a total return of about 75%, vs. 122% for the Bloomberg REIT Index. Duke [had] much of its operations located in the slow-growth Midwest, not the fast-growth coasts. Duke's nationwide push is a savvy move."

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