Book Value Volatility for REITs Steer Focus Toward Top-Tier Managements: Expert Analyst Douglas Harter Discusses His Overall Sentiment on the REIT Space with The Wall Street Transcript

Wall Street Transcript

67 WALL STREET, New York - June 20, 2013 - The Wall Street Transcript has just published its REITs Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Acquisition and Financing Costs - Pricing Power Outlook - Residential and Commercial REITs - Inexpensive Access to Capital - Apartment, Lodging, Self-Storage and Office REITs

Companies include: Newcastle Investment Corp. (NCT), National Semiconductor Corpora (NSM) and many more.

In the following excerpt from the REITs Report, an expert analyst discusses the outlook for the sector for investors:

TWST: What are your recommendations right now? What are your top picks?

Mr. Harter: Two Harbors (TWO) has been one of our favorite ideas for quite some time and remains that way. They put up very strong book value growth in the first quarter, and because of their nonagency exposure - nonagency prices quarter to date in the second quarter continue to go higher - their book value is likely higher as of today. So that probably puts them trading at only 2% to 3% premium today.

I think the combination of their track record, their hedging makes us feel very comfortable with that. Also, layer in that they have been active in terms of diversifying their investment base into new production securitization and looking to buy mortgage servicing rights. I think they are very much constructing a portfolio that should be able to have a stable performance going forward; again with a best-in-class management team makes us think that they should trade at a bigger premium.

TWST: Are there any other names that you would highlight?

Mr. Harter: That would be our top pick. I would say Newcastle (NCT), which recently had a spinoff, which split itself into two pieces, a residential and a commercial piece - I think each of those entities is attractive for various reasons.

The remaining Newcastle piece is interesting for a capital rotation standpoint, where they're going to be rotating assets away from commercial real estate debt and into senior living properties. As they do that, the initial rotation should be able to be both cash flow accretive and value accretive, as they should get a lower required dividend yield once they've effected that transition.

And then the residential piece, New Residential (NRZ), I think that's attractive from the continued transfer of servicing from...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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