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

To: Judith Malley M who wrote (600)	1/26/1998 12:31:00 PM
From: Richard Barron	Read Replies (2) \| Respond to of 2561

Judy, I like BOY, but unfortunately, it ran from 25 to 28 in just a month. After the strong earnings report, I will pick some up if it pulls back to 25-1/2 or so. It just reported a very strong earnings, so I'm not sure it will pull back. For the 1-3 year investor, hotel REIT's are pretty risky since the reported overbuilding would hurt rates and occumpancy. Many already have a slowdown priced in, but if a recession hits at the same time as overbuilding, then a much larger 20-40% additional pullback is possible. blankmind, FFO is funds from operations and most equity REIT's report this also. AMVP is the only one that is keeping it fuzzy that I am aware of. The theory is that the value of real estate doesn't really depreciate if properly maintained, so the depreciation and some other minor amortizations are added to the earnings to provide a truer measure of the earnings stream of a property. Most analyst use a P/E and compare it to a projected long term earnings growth rate to evaluate the fair value of an ordinary stock. To use a P/F (or price to FFO multiple and compare that to the FFO growth rate, gives an approximation to find good values in REIT's. REIT's that can grow by 12% long term would tend to trade at 15-17 x FFO since a dividend adds to the 12% growth rate giving a projected 15-20% total return long term. Hope this helps, Richard