UBS has published a study in which EQY is downgraded to "reduce" because of the proximity of strip centers to Wal-Mart Super Centers and plain old WMT stores. The downgrade was solely on the basis of the study findings. UBS reports that WMT has 10% of the grocery receipts in the country.
i agree...this is overdone!! been picking up some shares!! great REIT here!
whats funny is that RE is a hedge on inflation and they sell it!! CNBC is touting the sell off in mall reits today bc of future higher interest rates/floating interest rates and the downgrades of retail sector the other day
we are still in low inflation period and will be even if rates raise 1-2% in next year!! i certainly wouldnt buy treasuries that may go to 5%
Does it bother anyone on the board that eqy is selling at ~70% premium to book value? It does me, but I'd like to hear from others.
Book value is a function of historical asset values and the effect of GAAP depreciation. Real estate of this type typically appreciates and in any event, is worth more today than when it was bought or built years agao. For a REIT such as EQY, I'd look less at book value than at net asset value. The estimates I've seen go as high as $21.00.
It is 58% actually. It doesn't bother me since the assets are worth a lot more than "book value" because of their prime locations. Simon Properties for example sells at 393% of book and has a much higher debt/equity ratio, but is considered the blue chip of mall reits. Book value is pretty irrelevant as long as earnings keep growing.
< UBS has published a study in which EQY is downgraded to "reduce" because of the proximity of strip centers to Wal>
That's a simplistic view of the situation.
Wal can build traffic to a strip. EQY does well where there's a Wal.
Katzman explained this briefly -- he didn't get much air time -- when he was asked about Wal last year.
Downgrades used to be really good buying opportunities, but I think Investors may have wised up. I've noticed that with several REIT downgrades recently. Merrill still seems to be able to herd Investors around.