Wall Street Transcript Interview with Alexander D. Goldfarb, Managing Director and Senior REIT Analyst at Sandler O'Neill + Partners, L.P.: Bullish Outlook for REITs as Interest Rates Remain Low

Wall Street Transcript

67 WALL STREET, New York - June 19, 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: Parkway Properties Inc. (PKY), American Campus Communities In (ACC), Developers Diversified Realty (DDR), Wal-Mart Stores Inc. (WMT), The Home Depot, Inc. (HD), Lowe's Companies Inc. (LOW), Simon Property Group Inc. (SPG), Equity Residential (EQR), Post Properties Inc. (PPS), Essex Property Trust Inc. (ESS), Federal Realty Investment Trus (FRT), Realty Income Corp. (O) 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 top picks right now and why?

Mr. Goldfarb: Our top pick of the year is Parkway, which is a Sun Belt-based office company. This is a turnaround company with a new management that came in almost two years ago. They now focus on owning high-quality, desirable office buildings in the desirable submarkets in the Sun Belt, so places like Buckhead in Atlanta, Uptown in Charlotte, Westshore in Tampa, places where people are willing to pay more for rents.

Also, what's really interesting is, unlike 10, 20 years ago, the days of the "cornfields" being available to build in the middle of downtown Sun Belt cities just doesn't exist anymore. Most of the areas have been built up, cities are much stricter about what gets built these days and the economics aren't there, so we're seeing rent growth.

And it still doesn't make sense, apart from Houston, to build new office. So Parkway has done very well, and the team continues to do smart acquisitions that fit well within their strategy. For us, you've got an office company without any of the political or macro headwinds and a team that just continues to deliver, so we certainly like those guys.

Spirit (SRC) is another company. It's a triple-net company; it's a company that's come out of bankruptcy, led by Tom Nolan, who was one of the key people to help turnaround General Growth (GGP), very smart guy. They are in the midst of doing a merger with a private REIT, which will effectively double the size of the company and dilute the tenant exposure.

There was a lot of concern about the 30% exposure to Shopko, which is an upper Midwestern retailer; this transaction basically cuts that exposure in half. And Tom's not done yet. He'll do more transactions like that, which will dilute tenant exposure, lower the firm's cost of capital, and continue to grow. If you look on a valuation basis, it's trading cheap to its two other public...

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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