• Most Popular
  • Most Shared

UPDATE 1-RESEARCH ALERT-JP Morgan sees tough year for REITs

Tue Jan 13, 2009 9:13am EST

Stocks

    
 Jan 13 (Reuters) - J.P. Morgan Securities downgraded AMB
Property Corp (AMB.N) and six other real estate investment
trusts (REITs), and said it expects them to continue facing a
tough operating environment in 2009 with negative returns
expected this time around as well.
 "We think REITs will underperform the S&P 500 index .SPX
given J.P. Morgan's strategy forecast of a possible 20 percent
market return," analyst Anthony Paolone said in a note to
clients.
  Paolone said Wall Street earnings estimates would decline
with fundamentals proving to be weaker than expected.
 "Weak fundamentals should lead to more earnings downside,"
Paolone said. "Job losses accelerated through 2008 and could
continue well into 2009."
 The analyst also said that given the lag in commercial real
estate trends, he expects the worst occupancy and rent trends
of the cycle to unfold in 2009.
 He expects another 6 percent downside to the consensus
estimates for annual funds from operations (FFO).
 Separately, Paolone also upgraded Nationwide Health
Properties (NHP.N) and six others, and said the easing of
liquidity concerns could be the upshot to the group this year.
 "We think loan extensions and adding equity to balance
sheets will be commonplace, and it is justifiable to put
balance sheet strength above earnings in this environment," he
added.
 Following is a table of rating changes made on 13 REITs:
NAME                                   RIC         RATING
CHANGE
                                               NEW        
OLD Apartment Investment and Management Co (AIV.N)  
Underweight  Neutral AMB Property Co                       
(AMB.N)   Underweight  Neutral Boston Properties Inc           
   (BXP.N)   Overweight   Neutral Brandywine Realty Trust   
         (BDN.N)   Overweight   Neutral Brookfield
Properties                  (BPO.N)   Underweight  Neutral DCT
Industrial Trust Inc               (DCT.N)   Neutral     
Underweight Equity One Inc                         (EQY.N)  
Underweight  Neutral Lexington Corporate Trust             
(LXP.N)   Neutral      Underweight Macerich Co                 
       (MAC.N)   Overweight   Neutral Nationwide Health
Properties Inc       (NHP.N)   Overweight   Neutral ProLogis   
                        (PLD.N)   Underweight  Neutral
Public Storage                         (PSA.N)   Neutral     
Overweight
(Reporting by Biswarup Gooptu in Bangalore; Editing by Anil
D'Silva)



More from Reuters

Afghan insurgents kill CIA agents, Canadians

KABUL (Reuters) - Insurgents intensified their campaign against military targets and U.S.-led forces in Afghanistan, killing eight U.S. CIA agents at a base and four Canadian servicemen on patrol and a journalist accompanying them.

» More Top News
Floor traders work at the Hong Kong Stocks Exchange, January 16, 2008. REUTERS/Bobby Yip

My way or the highway?

Hong Kong is poised to accept Beijing's accounting standards. That's good. The system, though, is prone to scandal. That's bad.  Full Article 

Global Markets
People walk past a branch of Bank of America in New York's financial district April 28, 2009. REUTERS/Brendan McDermid
Rolfe Winkler:

Move your money

Boycotting "too big to fail" banks is a great idea -- so long as investors remember that banks aren't the only ones responsible for the crisis.  Full Article 

    Commentary