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REIT Winners & Losers: Regency Centers

The Associated Press

NEW YORK -- Shares of real estate investment trusts were mixed Tuesday, after a Goldman Sachs analyst said he remains cautious on the sector and made several ratings changes.

In a note to clients, analyst Jonathan Habermann forecast further downside to the shares of several REITs, citing ongoing challenges in the commercial real estate lending environment.

"As long as the credit markets remain tight, several REITs may be forced to sell assets at sharply reduced pricing, cut their dividends as many have already, and issue new common shares to de-leverage," Habermann wrote.

Habermann added Regency Centers (REG) to his "Conviction Sell" list and downgraded the REIT to "Sell" from "Neutral," citing concerns over near-term debt maturities and a concentration in weak commercial real estate markets.

Regency shares fell 34 cents, or 1%, to $32.74.

Habermann also reduced office REIT SL Green Realty (SLG) and shopping center owner Developers Diversified Realty Corp. (DDR) to "Neutral" from "Buy."

SL Green shares slipped 31 cents, or 1.9%, to $15.69. Developers Diversified added $1.10 cents, or 30%, to $4.73.

Habermann recommended that investors focus on better-capitalized companies with limited development exposure, including large-cap mall REIT Simon Property Group (SPG) and apartment REIT AvalonBay Communities (AVB).

Habermann said he is beginning to see more positive signs from the apartment sector. He removed AvalonBay from his "Conviction Sell" list and upgraded the stock to "Neutral" from "Sell." AvalonBay shares gained $3.82 cents or 6.8% to $60.26.

At the same time, Habermann removed Simon Property from his "Conviction Buy" list, but maintained a "Buy" rating on the shares. Habermann said he is concerned about store closings amid what is expected to be a weak holiday shopping season.

Simon Property shares tumbled 11 cents, or 0.2%, to $44.40 in afternoon trading.

Meanwhile, the government's announcement that it will buy $500 billion in mortgage-backed securities to help unfreeze the credit markets sent mortgage REITs higher. Mortgage-backed securities are pools of mortgages that are bundled together and sold to investors.

Annaly Capital Management (NLY) gained $1.17 to $14.95, while MFA Mortgage Investments (MFA) rallied 43 cents, or 11.4%, to $5.68.