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Hurricane Katrina could buoy plummeting homebuilding stocks and REIT funds.

The average REIT fund is down 6% over the past month, according to Morningstar, and the Philadelphia housing sector index has fallen more than 9%. The severe downdraft has got real estate investors on edge, wondering if the end of the so-called housing bubble is finally at hand.

One voice of calm in an otherwise worried marketplace is Sam Lieber, portfolio manager for the $900 million


Alpine U.S. Real Estate Equity fund. Lieber says the latest pullback is not unusual and certain sectors could even benefit from rebuilding projects associated with Hurricane Katrina.

Lieber's fund, which is heavy on homebuilding stocks like

KB Home

(KBH) - Get KB Home Report



(LEN) - Get Lennar Corporation Class A Report


Toll Brothers

(TOL) - Get Toll Brothers, Inc. Report

, has lost over 10% in the past month, but is still up more than 11% this year.

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checked in with Lieber to get his views on housing bubbles and hurricanes.

REITs and homebuilders have been hit pretty hard in the past month. What's behind the big downturn?

You have to remember that these stocks have had a very good run. From March through the end of July, REITs and homebuilders rose 26% and 43% respectively. So to see a pullback makes sense. The stocks were due for a correction.

On top of that, there are general fears about higher interest rates. Obviously, that hasn't happened yet, but the strong Aug. 5 employment report hit the stocks too.

Fed Chairman Alan Greenspan alluded to a housing bubble recently, which also didn't help real estate stocks. What's your position on the so-called bubble?

The world is certainly awash in liquidity. There are significant amounts of investment dollars looking for a home in real estate as well as a huge amount of investment dollars looking to finance real estate. Our view is that the world has not changed. There may be less of a cushion now, but overall there is less of a cushion in the economy whether it's the government or current account deficit.

In terms of the risk premium in housing, Greenspan is certainly correct that low returns in other areas have pushed investors to take on more risk for incremental return.

Your fund is top heavy when it comes to homebuilders and it's benefited you greatly. Is there any chance that you hit the brakes on the group soon?

Since February 2000 through July 2005, the homebuilding group has gained 812%. During that time period, the companies also averaged 33.5% annual earnings growth. Hence, it's not surprising that their multiples only increased from 4.5 PE on a forward-looking basis to about 6.5 times.

Given the huge order backlogs for these companies and their demonstrated capacity to increase market share at a double-digit pace and their financial strength, it suggests to me that these stocks will continue to provide revenue and earnings growth.

At these multiples, these stocks are still cheap from a historical perspective. I think we still have a ways to go on valuation and these companies can deliver earnings growth over the next couple of years on the order of 15% to 20% assuming we don't have a recession.

How does Hurricane Katrina play into the homebuilding sector? As ugly as it sounds, are there any opportunities?

It's tough. Obviously the mobile home stocks like


( FLE), which we own, are running. Certainly some of the rental facilities like

McGrath RentCorp

(MGRC) - Get McGrath RentCorp Report

will also spike.

All these companies will play some role in the rebuilding, but the question is, How much? Clearly, building materials of all kinds are having a huge move over the past couple days and we've got the major contractors moving too.

As far as the homebuilders, it's possible that certain homebuilders will be able to participate because entire communities are being destroyed. Public homebuilders can bring homes to market at a lower cost than private ones. The question is: How will the dollars be allocated and then dispersed from the government or insurance companies? That's not so clear yet.

Overall, we don't know the full scale of the devastation. The magnitude will be better known next week.

Katrina is also pushing oil prices higher. Has the spike in oil prices hurt business travel and therefore hotel REITs?

So far, the companies we have spoken to have said they have not seen a lessening of activity either from business or pleasure travel. It may be more apparent over the next few months as to whether oil prices stay at this level or move higher.

A certain segment of the economy is obviously getting squeezed and they are figuring out strategies to cope such as fewer trips. But I don't know if it will have a dramatic impact on the hotels. In fact, you could argue that in the short term, the lower-cost lodging plays like

La Quinta

( LQI) and


(MAR) - Get Marriott International, Inc. Class A Report

may see a short-term benefit from the hurricane because their rooms will be full.