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What is the best REIT to own?

Recs

8

July 24, 2009 – Comments (12)

Please feel free to add you pick in this blog and give some explanation.

 

Real estate in the long run is much safer than equities. Real estate does not evaporate and is considered a "real asset". There is no risk of competition and much less bankruptcy concerns. The product will always be in demand or at least will be less resistant to shocks.

 

Even if the REIT isn't going to generate a lot of income, we are still holding an asset like gold and silver, but at least will provide some kind of income . However it is very important to take into consideration debt levels ie leverage.

 

The most attractive sectors right now are REITS and shippers. The risk/reward seems to be favoring these two sectors.

 

My pick is BDN due to very low debt levels.

 

 

12 Comments – Post Your Own

#1) On July 24, 2009 at 10:18 AM, Rehydrogenated (32.31) wrote:

My pick is Arbor Realty. They have incredible exposure to New York commercial real estate. Naturally, their stock price at the moment is 1/15 or so of their GAAP book value. The CEO owns tons of stock in the company and just bough like 2 million more shares at 2.00. With these big banks making crazy trading profits where do you think they are going to spend all those billions? In New York. What will they buy? Underpriced real estate.

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#2) On July 24, 2009 at 10:25 AM, kaskoosek (35.23) wrote:

Rehydrogenated

Thanks for your pick. Looking into it. 

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#3) On July 24, 2009 at 10:31 AM, kaskoosek (35.23) wrote:

Rehydrogenated

They have very high leverage. What are your concerns about that.

Extreme dilution is not out of the question?

 

 

Total Debt to Equity (MRQ) = 4.89
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#4) On July 24, 2009 at 10:40 AM, TigerPack1 (81.69) wrote:

There will be many big winners from here, in the REIT group the next few years.

However, I like the VNQ ETF from Vanguard as the "safest" macro way to play the leveraged REIT marketplace.

They have very low fees and their index of 60 (I believe) or so REIT investments gives you great diversification in the sector, especially owning the larger cap variety of stocks.  The VNQ's have handily beat the other ETF and index like REIT investments the past several years, largely because of its size, with low turnover and low fees.

I would start with a decent weighting in VNQ, then buy 3 or 4 others you like best.

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#5) On July 24, 2009 at 10:41 AM, kaskoosek (35.23) wrote:

It looks a bit shady for me.

 

Do they own real estate or mortage backed securities?

If they own securities then I would prefer not to invest with them. This feels like owning citi. 

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#6) On July 24, 2009 at 10:52 AM, mas113m (< 20) wrote:

i would go with Government Income proerties Trust (GOV)

almost 9% yield, they lease office buildings to the government, mostly federal. government is our growth industry now, plus it is nice to have a tenant that can print the rent money if need be.

 

http://seekingalpha.com/article/143171-2-new-reit-ipos-to-watch

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#7) On July 24, 2009 at 11:03 AM, kaskoosek (35.23) wrote:

 mas113m

I have no nack for mortage backed securities.

 

All of these will go to zeroe when the government prints money. Since they do not operate the properties. 

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#8) On July 24, 2009 at 11:27 AM, mas113m (< 20) wrote:

kaskoosek,

 They are not mortgage backed securities, they are an equity REIT. I know the description on the Fool quote page is incorrect.

Here's a detailed description and MAP of their properties. Offhand, I know they own 3.3 million square feet of office over 29 buildings.

http://www.hoovers.com/government-properties-income-trust/--ID__160863--/free-co-profile.xhtml

 YTour reasoning for not liking MBS's, which I agree with, makes a strong argument for GOV. Their customers will be able to keep up with inflating rents as their customers will print the money.

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#9) On July 24, 2009 at 11:37 AM, kaskoosek (35.23) wrote:

 mas113m

Thanks for the link 

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#10) On July 24, 2009 at 1:32 PM, robtred (< 20) wrote:

I'd own only reit preferreds at this juncture with most with cash flow coverage(ffo) well in excess of the preferred dividends. The stronger ones are PSA, HCP, HCN, UDR, MAA, EQR and like these sectors. Office industrial favorites are DRE and HRP.

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#11) On July 24, 2009 at 1:43 PM, kaskoosek (35.23) wrote:

 robtred

 

Great insight 

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#12) On July 24, 2009 at 4:36 PM, JakilaTheHun (99.93) wrote:

Kaskoosek,

The best REIT depends on your investing style IMO.  

I like Brandywine (BDN), as well, and it's been one of my top picks even in spite of the recent dilution.  

I think DCT Industrial Trust (DCT) looks pretty juicy, as well.   They have low leverage for a REIT and even if they are an "industrial REIT", their properties are high quality and look like they could serve a large number of uses.

Lexington (LXP) has been the pick I've been expecting the most potential gains from, but it's riskiers than BDN and DCT.  It's also had one hell of a run over the past week, as it's jumped from $3 to $4.  I still think the market is dramatically overreacting on LXP as their cash flows look pretty solid and they've been paying down debt at massive discounts.  

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