Thu, Aug. 20, 9:42 AM
- Upgraded to Outperform from Neutral are AvalonBay (AVB -0.4%), DiamondRock Hospitality (DRH -0.6%), Federal Realty Investment (FRT -0.3%), and General Growth (GGP -0.6%).
- Upgraded to Neutral from Underperform are Vornado (VNO -0.8%), Regency Centers (REG -0.4%), and Corporate Office Properties (OFC -0.3%).
- Downgraded to Neutral from Outperform are Camden Property Trust (CPT -1.5%), and Eastgroup Properties (EGP -1.2%).
- Cut to Underperform from Neutral is UDR (UDR -1.2%).
Thu, Aug. 13, 1:37 PM
- According to Zillow, renters spent 30.2% of income on rent in Q2, the highest percentage since as far back as the data go (1979). In comparison, the average between 1995 and 2000 was just over 24%.
- Los Angeles is tops for unaffordability at 49%, with San Francisco not far behind at 47%. In NYC, renters historically have paid about 25% of income for rent, but that has gone up to 41%. Known for being more affordable than other major cities, the luxury condo market has transformed Miami, and renters there now pay 44.5%.
- The solution, naturally says Zillow, is to buy. In most cities, buyers can expect to pay less than 30% of income towards mortgage payments. "Rents are crazy right now," says Zillow Chief Economist Dr. Svenja Gudell.
- For apartment REITs, one is left to wonder how much more room there is to boost rents. Names of interest: Equity Residential (NYSE:EQR), AvalonBay (NYSE:AVB), and Essex Property (NYSE:ESS) - a big player on the West Coast - are the most sizable companies. Also: UDR, Post Properties (NYSE:PPS), Aimco (NYSE:AIV), Camden Property (NYSE:CPT), Mid-America (NYSE:MAA), Trade Street Residential (NASDAQ:TSRE), Investors Real Estate (NYSE:IRET), Independence Realty (NYSEMKT:IRT), Bluerock Residential (NYSEMKT:BRG), NexPoint Residential (NYSE:NXRT).
Thu, Jul. 30, 4:57 PM
- Q2 adjusted FFO of $82.8M or $0.91 per share vs. $77.1M and $0.86 one year ago.
- Same-property revenues up 5.2% Y/Y; expenses up 3.9%, NOI up 5.9%. Occupancy of 96% up 40 basis points from a year ago.
- Full-year FFO guidance is lifted to $4.47-$4.57 per share, with revenue, expenses, and NOI all up 5% at the midpoint of their expected ranges.
- Conference call tomorrow at 11 ET
- Previously: Camden Property Trust beats by $0.02, beats on revenue (July 30)
- CPT flat after hours
Thu, Jul. 30, 4:29 PM
Wed, Jul. 29, 5:35 PM
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Fri, Jul. 17, 9:57 AM
- A combination of sluggish job growth and abundant supply has made Washington, D.C. one of the worst U.S. markets for landlords, but rebounding employment is leading to renewed development.
- Toll Brothers (NYSE:TOL) plans to more than double its stock of apartments over the new three years, Camden Property Trust (NYSE:CPT) has 862 units under construction, and AvalonBay (NYSE:AVB) is boosting its investment in what may be a coming hot neighborhood. The nation's largest apartment REIT, Equity Residential (NYSE:EQR) is set to start work on a 174-unit building in Georgetown stalled since 2012. Still a bit wary, UDR is buying rather than building - last month it agreed to acquire six suburban communities from Home Properties.
- Effective rents fell 1.4% in 2013, and rose just 0.4% last year - enough to scare off smaller players. REITs however, have access to relatively cheap capital, giving them the opportunity to step in while the market is soft to hopefully take advantage of the next upturn.
- According to Axiometrics, effective rents will climb 3.4% in 2016 versus 2.9% for the entire country. 2107 should see a 4.5% increase, with 3.6% estimated for 2018.
- Source: Bloomberg
- Previously: Multi-family action leads gain in housing starts (July 17)
Thu, Jul. 2, 3:01 PM
- Even as public market valuations have pulled back, says Citi's Michael Bilerman, private market pricing has remained strong, widening the gap between price and value.
- While fund flows are a negative, Bilerman notes an uptick in interest from market generalists, suggesting they're beginning to spot value in the sector.
- Healthcare: The REITs here are particularly sensitive to rising rates given high external growth expectations and accretive "spread" investing. Bilerman has Overweights in large-cap Ventas (NYSE:VTR) and small-cap Sabra Health Care (NASDAQ:SBRA).
- Lodging: Supply is largely intact and demand continues to improve, hopefully setting up a strong H2. He continues to favor C-corps like Hilton Worldwide (NYSE:HLT), but also has Overweight positions on Host Hotels (NYSE:HST) and LaSalle Hotel (NYSE:LHO).
- Office/Industrial: This sector offers particular opportunity for outperformance, and he prefers urban names, Boston Property (NYSE:BXP), SL Green (NYSE:SLG), and Vornado (NYSE:VNO), and only select suburban names Parkway (NYSE:PKY) and Mack Cali (NYSE:CLI). In industrial, he's Overweight EastGroup (NYSE:EGP), Prologis (NYSE:PLD), and DCT Industrial (NYSE:DCT).
- Apartments: Growth remains strong and valuations attractive. He's Overweight large caps AvalonBay (NYSE:AVB), Equity Residential (NYSE:EQR), and UDR, as well as value name Camden Property Trust (NYSE:CPT).
- Retail: He's still Overweight Class A mall REITs, but is getting more bullish on strip mall names, with Kimco (NYSE:KIM), Acadia (NYSE:AKR), and Weingarten (NYSE:WRI) upgraded to Buy. Other top picks are General Growth (NYSE:GGP), Simon Property (NYSE:SPG), Kite Realty (NYSE:KRG), and Forest City (NYSE:FCE.A).
- Previously: Citi spots value in beaten-up REIT sector (July 2)
Fri, Jun. 26, 9:55 AM
- Lone Star Funds this week agreed to buy Home Properties for about $7.6B and two months ago Brookfield Asset Management agreed to buy Associated Estates for roughly $2.5B.
- "There is potential for something more to happen," says institutional REIT trader David Auerbach. "The smaller, local operators could be potential targets."
- Valuation helps too, and though apartments have been one of the best-performing segments in real estate - with near-record occupancy, and rising rents and property values - the stock prices of apartment REITs have failed to keep up.
- Potential targets, according to Jeffrey Langbaum of Bloomberg Intelligence, could be Mid-America Apartments (NYSE:MAA), Camden Property Trust (NYSE:CPT), or Post Properties (NYSE:PPS). All three operate in the South and trade at discounts to the sector's median price/FFO multiple. Their market caps are in the $3B-$6.5B range.
- Other possible targets include Bluerock Residential Growth (NYSEMKT:BRG) and Preferred Apartments (NYSEMKT:APTS) - both with market caps of about $200M, making them easily digestible.
Mon, Jun. 22, 12:48 PM
- Home Properties is up 2.3% after agreeing to sell itself to Lone Star Funds, but the news isn't doing a whole lot to lift M&A animal spirits in the sector for now.
- As part of the deal UDR (UDR +0.5%) will acquire from Lone Star up to $908M of Home Properties' apartments in the D.C. area. The purchase is expected to boost AFFO by $0.015 per share in 2016.
- Presentation slides
- Earlier this year, Associated Estates agreed to sell itself to a Brookfield Asset Management fund, and last year there was Essex Property Trust's purchase of BRE Properties.
- Equity Residential (EQR -0.3%), AvalonBay (AVB), Post Properties (PPS -0.2%), Aimco (AIV +0.2%), Camden Property (CPT +0.1%), Mid-America (MAA +0.2%), Trade Street Residential (TSRE), Investors Real Estate (IRET -0.4%), NexPoint Residential (NXRT -0.5%), Bluerock Residential (BRG -1.4%).
Mon, Jun. 15, 4:19 PM
Fri, Jun. 12, 12:40 PM
Tue, Jun. 9, 3:51 PM
- CPT takes note of the dramatic reshaping of the portfolio over the last four years, with operating communities down to 168 from 186. The number of apartments of 58,446 falls from 63,316, with monthly revenue per unit of $1,455 up from $1,079.
- The company currently has 13 communities and 4,463 units in development vs. two and 607 four years ago.
- The value per home is up to $196.5K from $118K, total enterprise value of $9.6B up from $6.7B, and NAV of $85 per share up from $49.
- 2015 FFO per share of $4.40-$4.56 vs. $4.36-$4.56 at last estimate. NOI growth is now seen at 3.5-5% from 3-5% previously.
- Presentation slides
Fri, May 29, 10:22 AM
- Cousins Properties (CUZ -0.2%) - with 39% Houston exposure - had minor water damage in loading areas, but no damage to the properties themselves, says analyst Ki Bin Kim. Parkway Properties (NYSE:PKY) - 26% exposure - had no material damage; Eastgroup Properties (NYSE:EGP) - 19% exposure - no impact; Camden Property Trust (NYSE:CPT) - 13% exposure - routine impact common with any big storm; Weingarten Realty (NYSE:WRI) - 13% exposure - water in one store; Sovran Self Storage (NYSE:SSS) - 5% exposure - leaks and some power outages.
Tue, May 26, 2:53 PM
- While acknowledging the impact of higher interest rates on REITs, the team at Credit Suisse says current prices do not reflect the private market values of REIT assets, nor the amount of sovereign wealth and other institutional capital still driving down "return hurdles in the public market."
- As a group, REITs trade at a 10% discount to NAV vs. an historical average of just 1%, says Credit Suisse. The team's favorite picks: Simon Property Group (NYSE:SPG), Prologis (NYSE:PLD), Boston Properties (NYSE:BXP), Camden Property Trust (NYSE:CPT), DDR, and RLJ Lodging Trust (NYSE:RLJ).
- Previously: Credit Suisse moves on three REIT names (May 26)
Thu, Apr. 30, 4:40 PM
- Q1 FFO of $1.08 vs. $1.05 one year ago. Adjusted FFO of $0.96 flat from last year ($11.3M of recurring capitalized expenditures vs. $8.4M a year ago).
- Same property NOI up 3.7% Y/Y. Occupancy of 95.5% flat.
- Q2 FFO guidance of $1.08-$1.12 per share. Full year FFO guidance of $4.40-$4.56. NOI for year up 4.25%.
- Conference call tomorrow at 11 ET
- Previously: Camden Property Trust beats by $0.01, beats on revenue (April 30)
- CPT flat after hours
Thu, Apr. 30, 4:35 PM
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