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Investors and analysts met with real estate investment trust companies at the National Association of Real Estate Investment Trusts REITWeek 2009 in New York this week and liked what they heard.
For the five trading days ending June 4, the average real estate fund advanced 7.5%, excluding inverse funds that sell short the property market.
The National Association of Realtors reported this week that April pending home sales jumped 6.7% as distressed sellers lowered prices to move foreclosed and pre-foreclosure properties. Residential construction even edged a bit higher, up 0.6%, as part of an overall construction increase of 0.8% partially due to the U.S. government's $787 billion fiscal stimulus package.
The best-performing real estate fund this week is the
LMP Real Estate Income Fund
building an 18% return. Top holdings saw gains of 33% in
Glimcher Realty Trust
, 26% in
and 22% in
Extra Space Storage
CBL & Associates Properties
rose 19% as it successfully extended the maturities on some of its outstanding debt. Another NAREIT REITWeek presenter,
Kite Realty Group Trust
, up 15%, emphasized its geographically diverse asset base, high credit quality tenants and liquid balance sheet.
The second-best performer,
ProShares Ultra Real Estate
, rising 18% on 200% leverage to the
Dow Jones U.S. Real Estate Index
, benefited from a 39% pop in
First Industrial Realty Trust
as it continued to deleverage by securing $154 million in new loans to retire debt coming due this month. Other winning positions include 34% from
Strategic Hotels & Resorts
, 23% from
CB Richard Ellis Group
and 22% from
LaSalle Hotel Properties
The only two real estate funds declining in value this week were the inverse funds betting against the industry members of the Dow Jones U.S. Real Estate Index. The
ProFunds Short Real Estate ProFund
, rated C-minus, and
ProShares UltraShort Real Estate
, rated E-minus, fell 8.1% and 16%, respectively.
As the health of the financial-services industry improves and more financing becomes available to real estate investment trusts, a main source of investor concern should continue to diminish.
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Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.