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Corrections Corporation of America Message Board

  • Reity1 Reity1 Mar 5, 1999 10:05 AM Flag

    Watch them flock in

    The market is so skittish right now that people
    need to find safer havens to invest their money. I
    think that REIT's offer a very attractive return and
    will attract investors over the coming months. And
    when the money rotates in, I believe that PZN will be
    near the top of the list because of its exceptional
    growth potential as well.

    Given today's
    announcement PZN offers a 12% annualized dividend yield (11%
    when you subtract the 5 cent special dividend). Where
    else can someone get that kind of return and still
    have capital appreciation potential?
    Nowhere.

    Enjoy the ride back.

    Stephen
    Reitmeister
    Editor of the Reitmeister Investment Newsletter
    (RIN)
    http://shrike.depaul.edu/~sreitmei - Free RIN Update available

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    • <Picture: Y
      delayed 20 mins -
      disclaimer
      Friday March 5, 1:56 pm Eastern
      Time

      ANALYSIS-REITs still lose out to hot growth stocks

      By
      Suchita Nayar

      NEW YORK, March 5 (Reuters) - The
      worst storm to hit U.S. real estate investment trusts
      in more than two decades appears to have blown over.
      But investors who abandoned ship are refusing to come
      back, leaving REIT stocks adrift.

      Given how
      Internet and other high-flying technology stocks can
      double in one day alone, investors have ignored the
      10-20 percent annual total return that trusts
      historically promise, analysts say. The National Association
      of Real Estate Investment Trusts (NAREIT) equity
      index fell 19 percent last year, its worst drop since
      1972.

      ``(REITs) are a dull story in a very sexy market,'' said
      Jeffrey Donnelly of Everen Securities.

      ``The only
      catalyst pulling this sector back will be one of relative
      valuations,'' he added. ``People will get tired of buying
      companies at 80 times earnings and might take some money
      off the table and put it in companies with more
      conservative and consistent valuations.''

      REITs, which
      own a portfolio of properties and are required to pay
      out 95 percent of their cash flow in the form of
      dividends, hold the promise of consistent income for
      shareholders. They have delivered at least a 5-10 percent
      growth in funds from operations, a key measure of their
      operating earnings.

      ``Investors don't want to play
      defensive when they can get 20-30 percent returns --
      sometimes ever larger -- in a day from frenetic stock
      activity in sectors like the Internet,'' said Jay Leupp at
      BancBoston Robertson Stephens. ``That's more than what REITs
      are expected to appreciate in an entire
      year.''

      But some think the tide for the beleaguered sector --
      once considered a safe haven -- could turn later this
      year as people realize its inherent value. Most REITs
      are trading at a discount to the value of their
      physical assets.

      Since the beginning of the year to
      Thursday's close, the Morgan Stanley Dean Witter benchmark
      real estate index (^RMS - news) has fallen by about 5
      percent, compared with the Dow Jones Industrial average
      (^DJI - news) and the technology-laden Nasdaq market
      (^IXIC - news), which have gone up some 3
      percent.

      Most REITs have hit rock bottom, such as shopping mall
      owner Simon Property Group Inc. (NYSE:SPG - news),
      which set a new 52-week low of $24.25 on
      Thursday.

      Few others, meanwhile, have managed to stay
      afloat.

      Mortimer Zuckerman's Boston Properties Inc. (NYSE:BXP -
      news) shares ended 6 cents higher at $32.81 on
      Thursday, near a year high of $36, while Sam Zell's
      Apartment Investment and Management Co. (NYSE:AIV - news)
      closed 50 cents lower at $38, near its year high of
      $41.63.

      Some analysts argue that the group has become highly
      oversold amid the possibility of a strong recovery in the
      second half of the year. Fears of a looming economic
      recession -- which rocked the sector last year -- appear to
      have dissipated, while demand for space remains strong
      in most markets. The credit crunch that curbed REIT
      expansion plans in 1998 also appears to have
      abated.

      But investors continue to pull capital out of the
      sector, causing mutual funds that own REIT stocks to sell
      their shares, dealing another blow to the companies,
      said Christopher Haley of First Union
      Capital.

      Tero Tiilikainen of SNL Securities said the REIT story
      in 1999 is going to be ``an operations story,'' with
      trusts focusing on internal growth and placing a premium
      on solid management teams and
      liquidity.




      ------------------------------------------------------------------------

 
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