Gregor,
I love REITs for the long term when they trade below 8 x FFO for a decently leveraged quality management team. I expect 2-5% long term growth in rents for most industries. That translates into faster FFO growth for most REITs since there is some leverage, and most of the mortgages are locked in. Many private real estate deals are at 80-100% leverage, so ones that have 60% or less leverage (not including preferreds, which are rarely called), seem to be historically safe. Just like most junk bonds never go bankrupt, most real estate that is in diversified regions and moderately leveraged, will not go broke. To own a few that are 60-70% leveraged with 10-13% dividends and 2-5%growth can give great long term results. Buying at a 5-25% discount on top of that can be a fantastic entry point, even though the first few months to years may look mediocre.
I agree that NXL and some others look very attractive. AER, AIC, CRRR, DDR, EGP, EQR, EPR, GTA, HIW, HRP, KRT, MAA, NHP, PEI, PLD, maybe PRT, PSA , maybe TRI, UBP, UHT, and WEA are ones that are near low ends of trading ranges that I am accumulating. Some of the hotels are getting way cheap,near 5-6 x FFO. FCH, MHX, KPA, ENN.
AIV keeps coming out with incredible FFO growth. So... even though the charts are bringing the ^RMS down, I agree that values are compelling in this area for many individual REITs. |
