August 20, 2009 / 2:38 PM / 10 years ago

UPDATE 1-RESEARCH ALERT-Bofa-Merrill starts coverage of 10 REITs

Aug 20 (Reuters) - Banc of America-Merrill Lynch started coverage on 10 real estate investment trusts, including Public Storage (PSA.N), and raised its price target on several others, saying they will realize greater growth than private real estate companies.

REITs have an advantage in raising capital through equity offerings and due to their increased ability to refinance debt, the brokerage said in a note to clients.

“REITs have also been more successful in receiving new loans from life cos and launching new JVs (joint ventures),” the brokerage said.

The brokerage, which started coverage of companies like Nationwide Health Properties NHP.N and Ventas Inc (VTR.N), said it recommends overweighting specialty REITs as it expects strong growth and student housing based on its defensiveness in the sector.

It also recommended underweighting apartments and strip centers companies, saying these REITs have the most earnings risk.

Shopping center space will face the highest imbalance between supply and demand over the next several years, the brokerage said.

This sector was the largest growth category in retail during the boom years, the brokerage said, adding that as a result, it expects to see the most store closings in it over the next few years.

Bofa-Merrill also started coverage of Digital Realty Trust Inc (DLR.N) and Senior Housing Properties Trust SNH.N with a “buy” rating; EastGroup Properties Inc (EGP.N) and DCT Industrial Trust Inc DCT.N with “underperform” and Public Storage with “neutral”, among others. [ID:nWNBB7690]

It also changed its price target on several stocks. [ID:nWNBB7715] [ID:nWNBB7710] [ID:nWNBB7712] [ID:nWNBB7713] [ID:WNBB7709] (Reporting by Amulya Nagaraj in Bangalore; Editing by Deepak Kannan)

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