Expert Analyst John W. Guinee III Shares His Outlook for the REIT Sector: Industrial REITs Show 25% Year-to-Date Average Return, Sun Belt Suburban Office Names Up 28%

Wall Street Transcript

67 WALL STREET, New York - June 18, 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: Apple Inc. (AAPL), Exxon Mobil Corp. (XOM), ProLogis (PLD), Vornado Realty Trust (VNO), SL Green Realty Corp. (SLG), Kilroy Realty Corp. (KRC), Duke Realty Corp. (DRE), Cousins Properties Inc. (CUZ) and many more.

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

TWST: Specifically for the office and industrial REITs, how are they faring in the current economic environment? How are the real estate market fundamentals like occupancy and rents doing, and how does that translate to profits?

Mr. Guinee: The industrial fundamentals are clearly on an uptick, and because the market is forward-looking, that has resulted in, I would say, B-plus improvement in terms of overall fundamentals, in terms of occupancy and increase in rents.

That has translated to a 25% year-to-date average return for industrial REITs. What I should also note is PLD (PLD) has been about 20%, and most everybody else is over 25% in terms of total return for the year, so it's been a very strong year on the industrial side.

In office, where office job creation tends to lag an economic recovery, the Sun Belt suburban names are up 28%, and the core suburban names up anywhere from 8% to 27%. The urban office REITs, often called the gateway city office REITs, are a little more modest for the most part, up in the low teens.

But overall, everybody is displaying good year-to-date returns, again driven much more by funds flows and dividend yield than overall improving fundamentals.

TWST: Looking forward, what do you see as the strongest subsector property types and geographic markets, and where is there perhaps caution because of weakness?

Mr. Guinee: The caution because of weakness is easy, and that's Lower Manhattan and the greater Washington, D.C., office market. Additionally, the low job growth - primarily Midwest, Northeast office markets are likely to lag. Where there's room...

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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