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On 9-21 JP Morgan Initiated coverage of AVB at Overweight. On 8-16 Steven Sakwa of Merrill Lynch reduced EQR to "Neutral" from "Buy," citing its high valuation. On 8-29 Robert W. Baird Upgraded AVB from Neutral to Outperform. On 8-31 Stifel Nicolaus Downgradee UDR from Buy to Hold. On 8-21 UBS raised its ratings on CPT and EQR on improving apartment fundamentals.UBS increased its price targets on 16 REITs. On 8-23 RBC Capital Markets downgraded CPT, EDR, ACC, PP, while it upgraded AVB, ASN and BRE. On 8-16 Wachovia Initiated coverage of HT at Outperform. On 14 Stifel Nicolaus Initiated coverage on SHO at Hold. On 8-29 Merrill Lynch cut Equity Inns (ENN) and FelCor Lodging Trust (FCH) to neutral from buy, citing valuation. The broker told clients it believes Felcor's greater exposure to suburban markets, as opposed to urban markets, may make the company more susceptible to increases in supply growth. Merrill cited greater exposure to the consumer leisure market for its downgrade of Equity Inns. ENN Raises Dividend Businesswire 9-15 Equity Inns, the third largest hotel REIT, announced its quarterly cash dividends of $0.23/share. Mr. Howard Silver, President and Chief Executive Officer, commented, "We are pleased that continued profit growth allows us to meaningfully generate shareholder value by increasing the amount of the cash dividend we pay and still stay within a conservative CAD payout ratio of 70-75%. Our dividend is now 21% more than our second quarter 2006 dividend and 35% higher versus the amount distributed this time last year. HST Raises Dividend PRNewswire 9-15 Host Hotels & Resorts announced a dividend of $0.20/share, representing an increase of over 17% from the prior quarterly dividend. The dividend is payable on October 16, 2006 to stockholders of record on September 30, 2006. Highland Announces Third Consecutive Quarterly Dividend Increase PRNewswire 9-08 HIH declared a quarterly dividend payment of $.19 per common share for the three months ending September 30, 2006. The dividend will be paid on October 13, 2006 to common shareholders of record on September 29, 2006. The third quarter dividend payment of $.19 per common share represents the Company's third consecutive quarterly increase of its dividend. It’s a Good Time to Be a Landlord Vivian Marino, NY Times 9-17 THE once-sizzling housing market may be rapidly cooling, but not all residential property owners are worried — especially if they happen to own apartment buildings. Landlords are enjoying booming times these days as more people are choosing to rent. Apartment vacancy rates are at five-year lows, averaging 5.6 percent nationwide and only 2.9 percent in the New York metropolitan area, according to the latest data from Reis Inc., a research company. Meanwhile, rents are up nearly 4 percent, on average, over last year, the biggest rise in six years, the company said. Fewer people have been eager to buy homes lately, in light of lofty prices and higher mortgage rates. What is more, industry analysts say, the supply of rental units is tighter, partly as the result of the conversion of rental apartments to condominiums at the height of the housing surge. And demand is intense as the children of the baby boomers, sometimes called the “echo boomers,” move out on their own. “The apartment landlords have a lot of room to raise rents even more,” said Louis W. Taylor, a senior real estate analyst at Deutsche Bank Securities, who predicts the industry will continue to thrive in the next 9 to 12 months. (Rents, averaging $1,143 a month for a two-bedroom nationwide, according to Reis, could jump 5 to 9 percent next year, Mr. Taylor said.) These strong fundamentals augur well for property owners. Many passive investors (those with little inclination to collect rents themselves) have been profiting, too, by investing in real estate investment trusts that hold large portfolios of multifamily properties and disburse most of their profits as dividends. Apartment REIT’s are now outperforming all other REIT sectors, after trailing in recent years. In fact, companies that focus on multifamily homes (there are 17 in all) accounted for 10 of the 25 top-performing property REIT’s as of last week, according to SNL Financial, a real estate research company. Total returns so far this year through Thursday averaged 34.4 percent, compared with 23.2 percent for all equity REIT’s, data from the National Association of Real Estate Investment Trusts showed. So, how long is this robust rally likely to last? While many analysts continue to recommend apartment REIT’s, particularly the so-called blue chips like AvalonBay Communities and Archstone-Smith Trust, which are expanding in tighter markets, some have been growing more cautious lately, suggesting that some shares are becoming pricey and may even be overpriced. Many share prices, they noted, may reflect speculation that multifamily REIT’s, because of their strong cash flow and collection of prized properties, could become takeover targets. In the last 12 months alone, three REIT’s in the sector have gone private at rich premiums, including Gables Residential Trust, which sold to a unit of ING Clarion Partners in a transaction valued at $2.8 billion. And in a pending deal, BNP Residential Properties announced at the end of August that it had agreed to merge with a unit of Babcock & Brown Real Estate Investments in a transaction valued around $766 million. “The question now,” said Ross L. Smotrich, a senior managing director and REIT analyst with Bear, Stearns & Company, “is whether the REIT’s will continue to appreciate or whether there is a downside risk. I think the prognosis is mixed. You have to be selective because of fairly rich valuations.” Several factors, he and others say, could work against apartment REIT’s down the road. Higher construction and labor costs could cut into profits for trusts that develop properties. Demand for rentals could abate if the economy starts to soften and rates of job growth decline, while a sharp increase in supply would raise vacancies. As the for-sale market weakens, some new condominiums and condo conversions could end up in the rental pool, particularly in overbuilt areas like South Florida, Las Vegas and parts of Southern California. “It will be interesting to see how things in condoland shake out,” said John J. Kriz, a managing director for real estate finance for Moody’s Investors Service, who remains bullish on the apartment rental market. “It could be good for the renters but bad for those in the rental apartment business.” For now, analysts think that some apartment owners may be better positioned than others. When it comes to REIT’s, Mr. Smotrich favors companies like Archstone-Smith and Camden Property Trust, which have myriad developments in the pipeline, and what he calls “reasonable valuations.” The Apartment Investment and Management Company and Post Properties, which has moved into the condo market through conversions and new development, “have less upside potential,” he added. Archstone-Smith, whose share price recently hit a 52-week high, has luxury rentals in markets like California and the Northeast and has been steadily expanding its portfolio. Its funds from operations (a financial measure used by REIT’s to define operating performance) for the second quarter rose 28 percent from a year earlier. In 2005, Archstone-Smith spent $2.5 billion to acquire apartment communities, including the purchase of a $1.6 billion portfolio from Oakwood Worldwide, one of the largest providers of corporate housing. And this summer, it acquired, among other things, a seven-building apartment complex in San Mateo, Calif., and a high-rise building in San Francisco, while also breaking ground recently on several developments, including the Archstone Clinton in Manhattan’s West Side. Camden Property, which started out in Texas and has focused on the Sun Belt states, has been expanding nationally as well. “The Sun Belt tends to be volatile, and our sense is Camden knows how to operate in those markets,” Mr. Smotrich added. Mr. Taylor has “buy” recommendations on Archstone-Smith and Camden Properties, along with a handful of other apartment REIT’s, including AvalonBay and BRE Properties, which also focus on high-end rentals in pricey markets. AvalonBay, whose share price recently hit a 52-week high, has seen its per-share funds from operation increase by 6.2 percent in the second quarter. The company has 17 apartment rental communities under construction, including Avalon Bowery Place in Manhattan, a 206-unit project slated for completion early next year. “We have more under construction now than we ever have had,” said Bryce Blair, the chairman and chief executive of AvalonBay, adding that he was not worried about an eventual oversupply. For one thing, he said, high construction costs have kept new development in check. “It’s difficult to build apartments today,” he said, “and on top of that, long-term factors are in our favor.” DEMAND remains strong because of the high prices for condos and houses, Mr. Blair said, noting that occupancy rates in AvalonBay properties now average 96.5 percent, up from 95.7 percent at the same time last year, and with far fewer concessions (like free rent for a month) than last year. Even those who could afford to buy are finding more value through renting right now, he said, adding that AvalonBay apartments provided many high-end amenities. R. Scot Sellers, chairman and chief executive of Archstone-Smith, where vacancy rates companywide are also around 96 percent, agreed. “With the reduced appeal of the condo market, more and more of our clients want to rent rather than buy,” he said. “There are neighborhoods where housing prices have tripled in the last five to seven years,” while rents have gone up only modestly. Mr. Sellers, meanwhile, dismissed conjecture that the apartment sector was overvalued, saying that share prices were “still below the value of the assets.” The prices of those REIT’s taken private, although rich, show their true value, he added. Both he and Mr. Blair, though, predicted that the sector would continue to consolidate through future acquisitions. “There may be fewer players, but bigger ones,” Mr. Blair said. NOTE: Although the tables above are checked and double-checked for accuracy, and may at times be 100% accurate - do NOT count on that. Please confirm through your own research any numbers on which you are to make a buy, sell or hold decision. Most sites giving this kind of data would say that it's information is for entertainment purposes only. I will not presume that you are that masochistic. And even accurately replicated and freshly retrieved FFO numbers are often stale. Home Page Previous REIT Update Top Sites |