AvalonBay Communities, Inc. (NYSE:AVB)

CAPS Rating: 1 out of 5

A real estate investment trust engaged in the development, redevelopment, acquisition, ownership and operation of multifamily communities in the barrier-to-entry markets of the United States.


Player Avatar AygHead (< 20) Submitted: 11/19/2012 2:07:34 PM : Outperform Start Price: $127.63 AVB Score: -17.27

Residential REIT's is like buying a utility with an inflation hedge. FFO is a bit rich, yes, but there are forces at work that should keep FFO stable or increasing. For one, the debt market is favorable now and for the forseable future for large real estate investors. Second, despite the supposed pending residentail housing boom that is running through the media, an increase in either property tax or income tax - or both - will give people pause to purchasing a new home. In essence, the rental market will remain strong and this market is already tight in many markets. In addition to these macro condition, many of these residentail REITs own properties in the prime / desirable locations of CBD's, where the population continues to migrate....Manhattan, LA, Denver, DC etc. In these areas, if you want commutability, you are more likely forced to live in a rental apartment/complex than a single family home.

In summary, market should be supportive to rental rates, low cost of financing, scarcity of product in prime locations, and real estate as an inflation hedge all bode well for the long term benefit of incorporating residential REITs into your portfolio....with a nice dividend to boot.

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