U.S. Real Estate Bargains - Barron's Interview

Barron's interviews JP Morgan portfolio manager Scott Blasdell, a U.S. and global real estate guru. Blasdell foresees a possible total 15-20% correction in property prices, which means a 30% drop in REIT prices, of which we've already seen 20%. However, he says, the timing is good to look at select property companies - the cheapest stocks in the sector.

Top holdings include:

• Simon Property Group (SPG)
• Public Storage (PSA)
• Boston Properties (BXP)
• Kimco Realty (KIM) and
• ProLogis (PLD) (see also Don't Throw Out ProLogis With REIT Bathwater).

Two other stocks he likes:

1) Colonial Properties Trust (CLP) has taken a beating, down 55% over the past year due to above-average debt and a misstep in condo developments. Blasdell thinks the firm has addressed its problems, and should emerge with a "very solid Southeast apartment portfolio."

2) Alexandria Real Estate Equities (ARE) develops lab space for biotech companies. It is now exporting its successful business model to Scotland, and potentially to Canada and China.

Comments

[zb:]

The REIT haters are missing the value play here. Only recommended if you can hang on for 5-7 years. But, golly darn it, that's where the money is made: buy and hold at a discount. If you have a 6 month horizon, well, this isn't for you.

2008 Jan 06 02:03 PM