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Strategies & Market Trends : REITS - Buying 1 - 2 weeks before going ex-dividend -- Ignore unavailable to you. Want to Upgrade?

To: Lee Bush who wrote (2352)	1/10/2003 9:52:31 PM
From: TimF	Respond to of 2561

IF the REITS go enough out of favor it might open up some really good buying opportunities, however lack of cash, less knowledge about REITS then other companies/industries , and other investment opportunities may keep me out of REITs. Tim

To: Lee Bush who wrote (2352)	1/11/2003 12:25:50 AM
From: Richard Barron	Read Replies (1) \| Respond to of 2561

Lee, I think REITs will correct 5-15% to adjust for the changes in dividend taxation. The long term effects should be minimal, though some REITs are likely to consider switching to taxable. Someone like Glimcher would probably have very low earnings and therefore pay .20 in taxes a year and could lower the dividend by the .20 yielding 1.72 net per share to a stockholder. Under current conditions, the 1.92 dividend is lessened by .70 or so tax liability. I think mall REITs and strips are fully priced and am avoiding them for new investments. Glimcher has a portion of their FFO from construction activity. Maybe this is going to dry up some in the future. Glimcher's FFO/share has dropped steeply since their stock offerings. They don't really create much shareholder value, but they have a sweet dividend. The AFFO/dividend ratio is probably the lowest of the mall REITs. I avoid REITs with dropping FFO. It is great that they improved their balance sheet in the last 2 years. Hotel, offices, and apartments don't have much chance of growing FFO near term. On the other hand, the cap rates are up in the private markets due to low interest rates. As such, many of these are trading at a good discount to NAV. The long term investor may one to average in on these every 3 months for a 1-2 year time frame on the less leveraged ones, with good management. These will likely be 9-14% total returns over a 10 year time frame. Richard