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Pennsylvania State University

; M.B.A.,

Columbia Business School

. Larry Raiman joined

Donaldson Lufkin & Jenrette

in 1994 to head the firm's real estate and REIT research team. This past August,

Credit Suisse First Boston

acquired DLJ, and Raiman moved over to CSFB in October. From 1991 to1994, he was primarily a REIT analyst at



Industry Outlook and Style

REIT stocks have benefited from the


recent free fall as investors seek out a safe haven from losses in the tech sector.

According to Larry Raiman, this rush to find a counterperformer to the Nasdaq has been a key driver in REIT shares' gains. The Credit Suisse First Boston analyst predicts the group will generate 12%-15% annualized total returns and produce 9% growth this year, 8% growth next. Companies he expects to grow the most are those with properties concentrated on the East and West Coasts, as these markets currently have the most robust trends.

Raiman thinks REIT stocks are generally fairly priced, but not cheap. In addition, the analyst sees positive fundamentals in most areas -- he describes supply and demand trends as being in sync across most major product types, including office, industrial and even shopping centers. Consequently, Raiman says, net asset values are rising, as are returns on invested capital, earnings growth and cash flow. He sums up reasons to be bullish on the sector: "You have fair valuation, fundamentals that are in pretty good shape, you've got earnings which are probably going up and dividend yields which are pretty good -- about 7% right now."

Out of their universe of 45 stocks, Raiman's group has four top picks. At the head of the list is

Equity Residential


, followed by

ProLogis Trust



Spieker Properties

( SPK) and

SL Green Realty


. (CSFB has investment banking relationships with Spieker and SL Green.)

ProLogis is the largest industrial REIT. The company has a very strong balance sheet, excellent management and an impressive network of corporate relationships, Raiman notes. He feels the stock is cheap based on his projections of 10% sustained earnings growth.

California-based Spieker is generating "fabulous rent growth" in the tight market for office space, says the CSFB analyst. While the company's average rents are below market, rents in the areas where it owns properties (primarily California, Washington and Oregon) have skyrocketed. Moreover, the analyst believes the company's growth prospects are excellent. SL Green, which Raiman describes as a "pure play" in New York office space, is benefiting from the Big Apple's equally tight office market.

While bullish on the sector overall, Raiman recommends steering clear of the health care subsector. He also expresses caution about the retail segment.

Stock Pick

Favorite stock for next 12 months:

Equity Residential


"Equity Residential is the largest apartment company in the U.S. The apartment business should be very resilient in the face of what could be an economic slowdown. Folks will rent more rather than buy, so they'll stay in their apartments longer. Equity Residential is also cheap. The stock trades, in our view, at a depressed level, so it's a good time to step in. Specifically, the stock trades at a level that is 10% below the apartment group average, despite what I think should be over time above-average multiples."

Rate Their Stock Picks:

Which stock do you like best?

Litt and Whyte: Equity Office Properties

Raiman: Equity Residential

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