To: wlheatmoon who wrote (84905 ) 8/1/2000 12:02:32 PM From: John Pitera Respond to Spieker Properties (SPK) 55 13/16 +4 5/32: We don't usually write on REITs here at Briefing.com, but Spieker properties is one we've liked for some time, and their blowout quarter demands some attention. Funds From Operations, (or FFO) is how REIT performance is measured, and SPK posted Q2 FFO of $1.05 per share, topping estimates by about $0.05-$0.08 and representing a 23.5% increase from $0.85 in Q2 of 1999. Net income of $61.3 mln on revenues of $184.0 was up from $48.7 mln on revenues of $158.7 mln in the year-ago quarter. Spieker Properties operates 41 mln square feet of commercial real estate in California and the Pacific Northwest, primarily Seattle, Portland and Northern and Southern California -- right in the headquarters of the technology movement. Strong demand for office space and industrial properties from technology companies has fueled Spieker Properties' growth, and even with the shakeout of many dotcoms this year, the real estate market remains red-hot in the West and Spieker management continues to deliver strong growth to its shareholders. SPK shares are up 59% YTD and the stock carries a dividend yield just above 5%, compare that performance to some of your technology holdings this year, and you can understand why the analyst community is so bullish on SPK. Salomon Smith Barney upgraded the stock this morning from OUTPERFORM to BUY and Lehman Bros. reiterated their OUTPERFORM rating after yesterday's Q2 results. Of the 85 major brokerage firms that we track on our Upgrades/Downgrades page, SPK's only downgrade in the past year game from Goldman Sachs in June, they lowered the shares from RECOMMENDED LIST to MARKET OUTPERFORM, strictly for valuation reasons. Goldman then followed up that note three weeks later by raising FFO estimates for FY00 and FY01. REITs are not for everyone and careful research is required before choosing individual REITs to invest in. That said, long-term, value minded investors looking for low volatility, current income and an inflation hedge should have a portion of their portfolio in REITs and we believe Spieker Properties is a fine candidate. Think you missed the boat on SPK? Indications suggest the shares will continue to outperform. New rents on leases signed during Q2 increased 68% over those on expiring leases and the average term on leases signed in the quarter increased to 69 months. Strong demand and limited supply of commercial space on the West Coast indicates continued strong earnings growth for Spieker Properties going forward. - Matt Gould, Briefing.com
