LMP Real Estate Income Fund(RIT)- NYSE
  • Yesterday, 8:15 AM
    • It's smelling like a top in real estate to Laszlo Birinyi, who wonders why investor interest and outperformance is enough to merit a separate S&P classification for REITs (specifically, equity REITs; mortgage REITs will remain in the financials).
    • He compares the move to the the decision to add Apple to the DJIA after its near-1000% rise from the March 2009 bottom. Since, Apple is the worst-performing name in that index, with a total return of negative 12.9%.
    • Up 348% from the 2009 bottom, REITs are trading at 45x earnings - "not a compelling purchase," says Birinyi.
    • Besides, says Birinyi, there are plenty of ETFs out there through which investors can already get easy exposure to REITs. This move, he says, is about benefitting S&P, which should be able to earn licensing fees from the funds.
    • ETFs: VNQ, IYR, DRN, RQI, URE, SCHH, ICF, RWR, SRS, RNP, RFI, JRS, KBWY, NRO, DRV, RIT, RIF, REK, FRI, DRA, FTY, FREL, LRET, PSR, WREI, XLRE, IARAX
    | Yesterday, 8:15 AM | 13 Comments
  • Wed, Aug. 17, 3:28 PM
    • Funds from operations for the equity REIT industry rose 7.1% for the quarter and were up 10.3% on a year-over-year basis, according to NAREIT. NOI gained 5% for the quarter and 9.1% Y/Y. Dividends of $12B were up 13.6% from Q2 one year ago.
    • Same-store NOI was up 4.3% Y/Y, with self-storage and data centers showing particular strength.
    • On a per share basis, FFO rose 5.5% Q/Q and 2.9% Y/Y; NOI gained 3.5% and 1.7%, respectively.
    • ETFs: VNQ, IYR, DRN, RQI, URE, SCHH, ICF, RWR, SRS, RNP, RFI, JRS, KBWY, NRO, DRV, RIT, RIF
    | Wed, Aug. 17, 3:28 PM
  • Thu, Jul. 28, 3:31 PM
    • Despite REITs having delivered far better total returns than the S&P 500 over virtually any time frame from the last three decades, fund managers continue to underweight the group, often chalking up the outperformance to little more than the epic bond bull market.
    • Controlling for changes in rates, however, shows REITs have still held their own versus other companies, suggesting, says Green Street, that they've consistently delivered better operating results, which in turn would justify higher multiples.
    • Cumulative indexed profits from REITs over the last two decades have been 20% higher than what the S&P 500 delivered, according to the report. "Superior operating results ... has translated into market-beating total returns."
    • REITs could fare even better in the future, suggests Green Street. First, profit growth this decade has been hurt by heavy dilution thanks to too much leverage pre-crisis - a lesson REIT managers have learned. Second, profit margins in the S&P 500 are near all-time highs, but the same can't be said for REITs. Finally, REIT portfolios are higher quality than in the past, which should mean improved long-term growth.
    • ETFs: VNQ, IYR, DRN, RQI, URE, SCHH, ICF, RWR, SRS, RNP, RFI, JRS, KBWY, NRO, DRV, RIT, RIF, REK, FRI, DRA, FTY, FREL, LRET, PSR, WREI, XLRE, IARAX
    | Thu, Jul. 28, 3:31 PM | 3 Comments
  • Wed, Jul. 6, 4:46 PM
    • CEM Benchmarking looked at fund performance and capital allocation for more than 200 public and private pension funds from 1998-2014.
    • What it found was that listed equity REITs outperformed all other 11 asset classes in the study, with average annual net returns 11.95%. Private-equity was second at 11.37%, pulled down by management fees nearly four times higher than that of REITs.
    • The average annual cost for public REITs of 0.51% was the lowest of any alternative or real estate asset groups.
    • Hedge funds had average annual costs that were double those of REITs, and produced just half the net returns at 5.5%.
    • Curiously though, allocations to hedge funds skyrocketed during the study period, while those to REITs stayed about flat. Putting numbers on it, hedge fund allocations grew to 8.36% from 1.46%, while listed REIT allocations of 0.62% edged up from 0.36%.
    • ETFs: VNQ, IYR, DRN, RQI, URE, SCHH, ICF, RWR, SRS, RNP, RFI, JRS, KBWY, NRO, DRV, RIT, RIF, REK, FRI, DRA, FTY, FREL, LRET, PSR, WREI, XLRE, IARAX
    | Wed, Jul. 6, 4:46 PM
  • Mon, Jun. 13, 7:31 AM
  • Wed, Jun. 8, 3:31 PM
    • Active fund managers routinely can't beat the indexes, and one big reason is their continued ignorance of REITs. Since 2000, REITs - little more than conduits for renting real estate and passing along rent payments to investors (minus a management fee, of course) - have returned an average 12% per year, crushing #2 finisher high-yield bonds at 7.9%, and positively walloping the S&P 500's 4.1% return.
    • Yet 40% of large-cap core mutual funds which invest mostly in S&P 500 stocks own zero REITs, according to Goldman Sachs. Overall, funds with no REIT exposure have a total of $528B in assets. Those funds that do own REITs have just 2% of assets in the names - less than 2/3 of the sector's weight in the market.
    • Later this summer, REITs will get their own sector classification, thus making it clear which managers are underweighting or altogether avoiding real estate.
    • The question, asks Ken Brown, is why do the same managers who routinely pile into the flavor of the month in tech stocks, for instance, avoid REITs? First off, there's little sex appeal. Second, REITs maybe move too much with the macro environment than managers are comfortable with. Third, there's the constant idea that higher interest rates are right around the corner - REITs tend to underperform when rates rise.
    • See also: Extra Space Storage - why didn't we buy it? (June 8)
    • ETFs: VNQ, IYR, DRN, RQI, URE, SCHH, ICF, RWR, SRS, RNP, RFI, JRS, KBWY, NRO, DRV, RIT, RIF, REK, FRI, DRA, FTY, FREL, LRET, PSR, WREI, XLRE, IARAX
    | Wed, Jun. 8, 3:31 PM
  • Fri, Jun. 3, 10:12 AM
    | Fri, Jun. 3, 10:12 AM
  • Tue, May 24, 3:57 PM
    • MSCI and S&P Dow Jones at the end of August will be moving REITs out of the financial sector and into a separate REIT classification.
    • David Kostin and team figure the move will lead to $19B in REIT-buying demand from active mutual fund managers. The biggest demand will come from those managers who currently have no REIT exposure as they will instantly be underweight the sector. Kostin figures this describes a whopping near-40% of large-cap core fund managers.
    • While it might mean hefty support for the names in the weeks up to the change, the Fed and its on-again, off-again rate hikes might matter most.
    • REITs represent 3% of the overall market today vs. just 0.1% in 2003. They represent 18% of the S&P 500's financial sector.
    • ETFs: VNQ, IYR, DRN, RQI, URE, SCHH, ICF, RWR, SRS, RNP, RFI, JRS, KBWY, NRO, DRV, RIT, RIF, REK, FRI, DRA, FTY, FREL, LRET, PSR, WREI, XLRE, IARAX
    | Tue, May 24, 3:57 PM | 15 Comments
  • Wed, May 18, 2:42 PM
    | Wed, May 18, 2:42 PM | 91 Comments
  • Fri, May 13, 12:43 PM
    • Financials are already laggards, having shed more than 3% this year - the third-worst performance of the ten S&P 500 sectors - versus the broader market's 1% gain. And that's with the contribution of REITs, which are higher by 6.7%.
    • Come September, though, real estate stocks are set to be split off from financials in the first S&P 500 sector lineup change since the current one's introduction in 1999.
    • Investors have pulled about $4.8B from mutual funds and ETFs focused on financials this year - how much might they have pulled, and how much will they pull once the popular REITs have their own home?
    • State Street Global Advisors late last year launched a special real-estate sector ETF (NYSEARCA:XLRE), and it's higher by 4.2% this year versus the Financial Select SPDR's (NYSEARCA:XLF2.8% loss.
    • "We're going to follow the changes in the benchmark," says Vanguard, but iShares' U.S. Financials ETF (NYSEARCA:IYF) follows a different index (it's off 1.7% this year), so will be unaffected by the change.
    • Source: WSJ
    • ETFs: XLF, VNQ, IYR, FAS, FAZ, UYG, VFH, DRN, RQI, URE, SCHH, ICF, RWR, SRS, RNP, IYF, RFI, JRS, BTO, KBWY, NRO, DRV, RIT, IYG, FNCL, SEF, FXO, RIF, REK, DRA, FRI, RYF, FINU, FTY, RWW, FREL, LRET, PSR, XLFS, WREI, FINZ, XLRE, IARAX, FAZZ
    | Fri, May 13, 12:43 PM | 12 Comments
  • Thu, Apr. 21, 3:20 PM
    | Thu, Apr. 21, 3:20 PM | 94 Comments
  • Fri, Apr. 15, 2:21 PM
    • "There is no substitute for scale," says Sam Zell, predicting a wave of M&A in REITs over the next couple of years.
    • "You've got $1.5B office REITs. What are you doing? How do you create liquidity? How do you go forward? How do you raise more capital? I think those are all challenges very much related to size ... If I were an institutional investor, I can't imagine investing in these little companies."
    • Source: SNL Financial
    • Meanwhile, Green Street Advisors' Mike Kirby has never been a fan of REIT mergers, citing 25 years of data showing the deals tend to be good for the acquired, but not so much for the acquiree. He's warming to the idea, however, noting NAV discounts across much of the sector offer an arbitrage opportunity for those blessed with NAV premiums.
    • Prologis (NYSE:PLD) CEO Hamid Moghadam warns of the difficulties in integrating distinct company cultures. Public Storage (NYSE:PSA) boss Ronald Havner says premiums/discounts don't mean as much to him as whether a deal improves long-term cash flow.
    • "We'd like to be bigger, but being bigger is not the end-all," says Duke Realty (NYSE:DRE) CEO Jim Connor, noting even a significant discount is not sufficient rationale for a deal.
    • ETFs: VNQ, IYR, DRN, RQI, URE, SCHH, ICF, RWR, SRS, RNP, RFI, JRS, KBWY, NRO, DRV, RIT, RIF, REK, FRI, DRA, FTY, FREL, LRET, PSR, WREI, XLRE, IARAX
    | Fri, Apr. 15, 2:21 PM | 1 Comment
  • Fri, Apr. 8, 11:32 AM
    • The total return of the FTSE NAREIT All REITs Index was 9.99% in March and 5.86% in Q1, significantly outpacing that of the S&P 500 at 6.78% and 1.35%, respectively.
    • The FTSE NAREIT All Equity REITs Index gained 10.17% in March and 5.84% for the quarter. The mortgage REIT gauge advanced 4.48% and 1.28%.
    • Leading the way were free-standing retail REITs - think Realty Income (NYSE:O), National Retail Properties (NYSE:NNN), Spirit Realty (NYSE:SRC), Agree Realty (NYSE:ADC), and Store Capital (NYSE:STOR) - with a total return of 18.69% in Q1.
    • At quarter's end, the All REITs Index dividend yield was 4.19% vs. the S&P 500 at 2.15%.
    • ETFs: VNQ, IYR, DRN, RQI, URE, SCHH, ICF, RWR, SRS, RNP, RFI, JRS, KBWY, NRO, DRV, RIT, RIF, REK, FRI, DRA, FTY, FREL, LRET, PSR, WREI, XLRE, IARAX
    | Fri, Apr. 8, 11:32 AM | 3 Comments
  • Wed, Mar. 16, 3:45 PM
    • Currently lumped into the financial sector, REITs are set to have their own sub-sector with S&P Dow Jones Indices on Sept. 16.
    • Excited yet? You should be. Cohen & Steers' Thomas Bohjalian expects far-reaching impact since nearly the entire investment community uses Global Industry Classification Standards for its framework for portfolio planning and analysis. He sees three main benefits to REIT prices:
    • Increased demand - U.S. equity funds are significantly underweight and would need to buy more than $100B of REITs just to get to a market-neutral position.
    • Reduced volatility - Boosted liquidity and the separation of real estate from the historically volatile financial sector.
    • Impact on allocations - Analysis of REITs requires unique valuation metrics, giving REIT specialists a performance advantage over generalists.
    • Howard Silverblatt notes the change will highlight the REIT sector's big 3.46% average yield, and cut the financial sector yield to 1.98% from 2.25%.
    • Ninety REITs will be classified in the new real estate sub-sector. The five largest by market cap, and maybe the five most likely to see a bounce: Simon Property (NYSE:SPG), Public Storage (NYSE:PSA), American Tower (NYSE:AMT), Crown Castle (NYSE:CCI), Equity Residential (NYSE:EQR).
    • ETFs: IYR, VNQ, DRN, URE, RQI, SCHH, SRS, ICF, RWR, RNP, JRS, KBWY, RFI, NRO, DRV, RIT, REK, RIF, FRI, DRA, FTY, PSR, FREL, LRET, WREI, IARAX, XLRE
    | Wed, Mar. 16, 3:45 PM | 16 Comments
  • Tue, Mar. 8, 3:13 PM
    | Tue, Mar. 8, 3:13 PM | 3 Comments
  • Thu, Mar. 3, 10:57 AM
    | Thu, Mar. 3, 10:57 AM
Company Description
Under normal market conditions, the Fund will invest at least 90% of its total assets in income-producing common shares, preferred shares, convertible preferred shares and debt securities issued by Real Estate Companies, including REITs. The Fund may also
Sector: Financial
Industry: Closed-End Fund - Equity
Country: United States