Special Report – Capital Structure in the REIT Sector
Differences in capital structure have proven to be one of the largest determinants of total return differentials across REITs. Building on over twenty years of extensive research, Mike Kirby and Peter Rothemund recommend an optimal capital structure for REITs, and provide a roadmap for investors to capitalize on fundamental misunderstandings on this topic.
Announcing Green Street's 2015 U.S. Industrial Outlook
Industrial fundamentals and asset values have been improving at a steady pace. Growing production, trade, and eCommerce are driving this healthy demand for space. Eric Frankel and his team recently published the U.S. Industrial Outlook which offers even more insights into industrial supply and demand fundamentals, investor return expectations, and the upcoming completion of the Panama Canal Expansion.
Green Street's 2015 U.S. Office Outlook
Jed Reagan, John Bejjani, and the office team recently published their Outlook for 2015. The U.S. office market had been slow to recover in this cycle, but fundamentals are now accelerating and supply growth remains benign in most markets. The U.S. Office Outlook report takes an in-depth look at the largest U.S. office markets to help identify characteristics that may affect future investment performance. It provides Green Street's proprietary cap rate and unleveraged return data for the top 30 markets as well as our insights into key office themes such as high-barrier vs. low-barrier fundamentals and valuation, the trend to less space per employee, falling oil prices, and capital expenditures.
Announcing the 2015 U.S. Strip Center Outlook
The average U.S. shopping center has been slowly gaining traction since The Great Recession, and strip centers are likely to have a multi-year run of positive fundamentals – largely due to historically low levels of new supply growth. Even though income growth remains modest, lower gas prices have provided consumers with a bit more cash to spend. Jason White and his team recently published the U.S. Strip Center Outlook which offers even more insights into strip center supply and demand fundamentals, the health of strip center retailers, and the growing threat of eCommerce.
Green Street's 2015 U.S. Mall Outlook
D.J. Busch and his team expect the bifurcation in the performance of high-productivity or "A" malls vs. lower-productivity centers to continue. "A", malls should enjoy several years of robust NOI growth and while lower-productivity centers should benefit from a favorable supply landscape, NOI growth is expected to be materially lower than that of high-end malls. To help investors capitalize on the opportunities and risks in the sector, Green Street presents its 2015 U.S. Mall Outlook, a Real Estate Analytics product. This report serves as a deep dive into the fundamentals and valuation of the mall sector drawing on Green Street's extensive experience and proprietary mall database.
2015 U.S. Apartment Outlook – A Real Estate Analytics Product
Dave Bragg and his team provided a macro overview of the apartment sector, including national and market-level forecasts for 2015-19. Institutional-quality apartments are now 26% above ’07 peak levels and continue to look attractively valued. The annual U.S. Apartment Outlook serves as a deep dive into the supply and demand dynamics affecting the apartment sector, and provides key insights into how these drivers vary across the top-30 apartment markets. 2015 U.S. outlook reports for the Mall, Office, Strip Center and Industrial sectors will be published in the coming weeks.
REIT Market Provides a Window into Future Private Real Estate Values
Andy McCulloch, who manages Green Street's Real Estate Analytics group, expects continued upward pressure on real estate asset values. In a REIT.com interview, he explained that while asset values in all the major property sectors are at or above previous market peaks, real estate returns still look attractive relative to the fixed income market. Andy also spoke about why both public and private real estate investors should follow the REIT market. Public market pricing can provide a window into future private market pricing. Finally, he discussed the systematic mispricing in the market due to most real estate investors’ underestimation of cap-ex requirements. Green Street advises investors to overweight low cap-ex property types, such as apartments, self-storage and manufactured housing.
Green Street Publishes Reports on Two REIT IPOs
Green Street published two in-depth IPO reports this week on Paramount Group and STORE Capital, highlighting key valuation issues for investors to consider. Green Street has written on over 65 REIT IPO/Initiation reports over the past 10 years, making it unique among research providers.
Paramount Group, Inc. (PGRE): A REIT IPO of "Paramount" Importance
Portfolio Value - Overall ($B)
Michael Knott, Jed Reagan and the Office team published a report on the pending >$2.5 billion Paramount IPO, which would be the largest ever for a REIT. Proceeds are intended mainly for debt reduction to create a healthy balance sheet. Paramount is a “real company”.
Preview PGRE Report
STORE Capital (STOR): Like a Kid in a Candy STORE
NL REIT Equity Market Capitalization
STORE (STOR), a $2.8 billion REIT owning mostly retail net lease properties, seeks to raise $530 million in an IPO. The proceeds from the IPO will fund acquisitions. Cedrik Lachance writes that investors should expect a torrid acquisition pace - STORE will be the fastest growing Net Lease REIT as a percentage of assets.
Preview STOR Report
Heard on the Beach: Prairie Dog Town
New REITs are popping up left and right. Recent results suggest investors would be wise to not play favorites. It's hard to recall a time since the '93/'94 REIT IPO frenzy when more new, credible companies have been slated to soon become publicly traded REITs. Not only is the traditional IPO path to the public market unusually active, an even higher level of activity is taking place in two other, less-traditional channels: 1) C-Corps converting to or spinning out REITs; and 2) Non-Traded REITs (NTRs) listing their shares. REIT investors tasked with familiarizing themselves with the new kids on the block will be pondering where to best devote their energies.
Single-Family Rental Sector: Growing Up Before Our Eyes
SFR Estimated Median Gross Yields
In a special report and accompanying conference call on the Single-Family Rental (SFR) sector, Dave Bragg and David Segall conclude that a consolidation wave has only just begun and should accelerate. Their report provides highlights from Green Street’s proprietary database of 75,000+ institutionally-owned SFR assets with insights on gross yields, rent growth, and asset quality. It also gives an updated valuation of SFR REIT American Homes 4 Rent (AMH).
How to Value REITs: Download Green Street's Updated Guide
*Past performance as of 5/30/14 cannot be used to predict
future performance. Please see our track record disclosure.
Green Street just posted its updated REIT Valuation guide based on its NAV-based pricing model for the general public. The model has been pivotal behind the firm’s superb twenty-year recommendation track record. The guide provides the nuts and bolts of an NAV-based analysis, the factors that impact the premiums at which REITs should trade (franchise value, balance sheet risk, corporate governance, and overhead), and Green Street's relative valuation approach for identifying the most/least attractively valued REITs.
Green Street in the News: Starboard Real Estate Primer on Darden
Green Street's Advisory & Consulting group recently completed an in-depth valuation analysis of Darden Restaurants, Inc.'s (NYSE: DRI) real estate holdings for Starboard, a sophisticated hedge fund client. The analysis included a detailed review of each of Darden's locations. Using Green Street's proprietary data and industry contacts and knowledge, in combination with publicly-available information, our consulting team derived valuation estimates for the company's owned and leased real estate. Starboard used this information as part of a publicly-filed presentation to argue for a sale or spin-off of the Company's real estate to enhance shareholder value.
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Mike Kirby Wins Graaskamp Award
Photo Courtesy of Michael Grecco
The James A. Graaskamp award aims to recognize people who, through significant research, contribute practical insights of immediate use to real estate decision makers.
Barron’s Interviews Mike Kirby
Barron's Interviews Green Street Advisors
Michael Grecco for Barron's
Barron's recently talked with Green Street's president, Craig Leupold, and its director of research, Mike Kirby, about REIT valuations, leading stocks, popular exchange-traded funds and the merits of REITs versus private real-estate investments.
Barrons - REITs with the Right Stuff