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Forgive and forget: Short sales saved from fiscal cliff
Forgive and forget: Short sales saved from fiscal cliff
By Megan Hopkins
• January 2, 2013 • 5:12pmREITs Gained in 2012 on Economy, Housing
A.D. PRUITT
Bolstered by a strengthening economy and improving housing market, real-estate stocks capped off 2012 with robust returns that outpaced the broader stock market.
The Dow Jones Equity All REIT Index, which tracks 136 real-estate investment trusts, delivered a total return of nearly 20% for 2012, more than double the 7.5% gains in 2011 and the fourth consecutive year that REITs outperformed the Standard & Poor’s 500 stock index, which gained 16% in 2012. The Dow Jones Industrial Average also lagged behind REITs, posting a total return just over 10%.
The stocks of home builders posted even stronger gains as revenue climbed on rising home sales. The Dow Jones U.S. Construction Index ended 83% higher in 2012. Hovnanian Enterprises Inc., HOV +2.71% which experienced one of the strongest turnarounds among the big builders, saw its stock climb 383% last year, while PulteGroup Inc., PHM +1.87% the second-biggest builder, rose 188Although few REIT stocks matched the performance of home builders, the stocks still outperformed many other industries. Investors were drawn to REITs in part because strong economic fundamentals allowed landlords to raise rents, increasing revenue and profit. REITs also have relatively high dividend yields, which currently average about 3%, compared with 1.7% on 10-year Treasurys and an average 2.2% for the S&P 500.
REITs also benefited from perceptions that they are a safer bet than other financial stocks at a time of global and domestic financial unease. “The three major sources of uncertainty were Europe, the presidential elections and the fiscal cliff,” said Hessam Nadji, a Marcus & Millichap managing director. “Given the degree of uncertainty elsewhere and real-estate fundamentals improving faster than the broader economy,” investors were attracted to real estate, he said. Mr. Nadji anticipates another strong year for REITs, with gains between 10% and 12%.
Last year also was a good year for REITs to raise capital. According to the National Association of Real Estate Investment Trusts, REITs raised a record $67.4 billion in debt and equity as of November, up 30% from 2011. Companies raised $34 billion in equity, $1.5 billion from initial public offerings; $10.3 billion in preferred shares; and $21.6 billion in unsecured debt.
Much of the funds raised were used to pad war chests for acquisitions and to pay down debt.
Jeff Horowitz, global head of real estate, gaming and lodging investment banking at Bank of America BAC +3.23% Merrill Lynch, noted that REITs made a significant number of acquisitions in 2012, many ranging in size from $500 million to $1 billion. “We’re seeing less transactions of larger scale, but more companies participating and conversations increasing” about new deals, he said.
However, mergers and acquisitions activity actually declined in 2012 to $55 billion as of Dec. 5, a 23% decrease from 2011, according to Real Capital Analytics. The number of deals also dropped off, with 1,476 acquisitions recorded in 2012, a 60% drop from the year before.
Analysts contend that REITs didn’t deploy as much capital as expected because good deals have been hard to find. Valuations for commercial properties have risen sharply in the past year, and U.S. REITs are competing with big foreign investors eager to buy prime properties, especially trophy assets in New York, Washington, Boston and San Francisco.
The most noteworthy deal in 2012 was Equity Residential EQR +1.08% and AvalonBay Communities’s AVB +0.58% $16 billion acquisition of apartment operator Archstone Inc. There were only three REIT mergers in 2011, including the deal between Prologis Inc. PLD +2.16% and AMB Property, which was valued at about $17 billion.
The top-performing REIT sectors in 2012 were regional malls, with total returns up 28%, industrial operators, up 23%, and health-care companies, up 20%. A rise in consumer spending emboldened higher-end mall operators to raise rents as retailers reported higher sales and opened new stores. Industrial landlords benefited from rising demand of warehouse space from national retailers, analysts said.
“The malls that had the best performance were the high-end malls,” said Jim Sullivan, managing director of REIT research at Green Street Advisors. He noted this benefited the largest mall REITs, such as Simon Property Group Inc., SPG +0.87% which was up 22%, and Taubman Centers Inc., TCO +1.49% up 27%.
Health-care REITs were strong because their average 4.8% dividend yields are among the highest in the sector, and health-care landlords have been most aggressive in acquiring new properties.
Hotel REITs posted smaller gains in 2012, averaging just over 12% in the Dow Jones REIT index. The sector lost didn’t have as much luster with investors primarily because revenue rose more slowly than expected. U.S. hotels posted a 6.7% gain in revenue per room in the first 11 months of 2012, a slowdown from their 8.2% gain in the same period of 2011, according to Smith Travel Research.
Apartment companies, among the top performers over the past two years, posted among the smallest returns in 2012, at 7%. Although rising demand has allowed apartment landlords to raise rents, leading to strong profits, some analysts believe conditions will change in 2013 as a wave of new apartment units are scheduled to hit the market. In addition, falling mortgage rates are starting to pull more renters into the home-buying market.
—Kris Hudson contributed to this article.
Samuel Rodriguez
United and Prosperity
United and Prosperity
Today I feel like if I have 20 Million Dollars in my hand, my faith and connection to God or th higher has already given me the faith and I see it in my bank account. No other doubt will come to heart except thnaking God or the Higher for the blessing and the connection of my faith which becomes stronger every morning.
I woke up thanking God or the higher and by repeating to myself impulsing my sub to a great propsperity to be able to help fisrt my family and my parents which I already promised to them to take thme to “Israel” the holy land where Jesus was borned.
The faith keeps growing so hard that it seems that it can explode in my heart, the time that we cannot buy because is so value, Im putting together a plan where I can manage time to achieve and see the posperity that God or the Higher has given me already.
I will pray for the Goverment for the Counties and any institution that will cooperate and participate with me the this great abundance, as a very important said with those words full of wisdom “If the Goverment has piece and wisdow than we can be United and in Prosperity” and I would say in this abundance “May God Bless Our Government” guide them give them the right decisions and make them see the good for the people.
United and Prosperity of 20M Dollars are here in my bank account and my faith will explode to move the mountains and the God or the Higher Power will bring for sure today the Prosperity and the United of my family with Joy and Respect.
Everyday and every second my heart and my faith with double and triple and i hope that you who are reading this Blog can join us and make this times a better place to live and to give to people a gift from the bottom of our hearts.
Samuel Rodriguez
Reflection 2012
Reflection 2012
Is the end of the year and I’m here thinking about this past here and all my achievements and success and balancing my 360 days till now it was a very important year in my life.
First of all life is so important and I”m here enjoying this beautiful life with this beautiful sun this morning and I decided to write before the end of the year and let you know that I cant believed that life has passed so fast and “cheez” I love life more than even.
Up to this day I’m a better person, better father, better friend and a better businessman. This year 2012 has change me forever and I see it with my family, a lot of my accomplishments I see them realized and done and I keep on going for double or more goals to achieve.
One of the things that I want check every single day is “friendship” looking back and to the future giving to others just “a little love” can really change my attitude and I can become a better person.
Myself my soul and me, we are talking to united and hoping that someone out there who can read this words can think about this year and wait for the the next but with a deep reflection “May God Bless You All”
Samuel Rodriguez
Succes and Failure In Real Estate and Business
Real Estate Success and Failure
Getting success can be easy but sometimes can be difficult, real estate trends change every single day since is attached very close to the economy and laws are moving and changing so make sure in order to succeed to read at least a Real Estate Article from Wall Street as a daily reading which can help get any person updated in Real Estate.
Success can be achieve in a very simple way “Pay Your Dues” in Real Estate Means respect the business, government, and the Real Estate Laws, never trespass the law and always respected.
Getting Friends and Influencing People is so important but the right friends and people, I am talking about local government counties are gold mines for Real Estate so make sure to know as many people in your Local County, remember their names their positions even the clerk in the Local County is so important.
Success is so close by visiting REIA’s your Real Estate Investments Association and make sure to know and get known with a lot of Real Estate Investors who are very experience in this Business.
Failure in Real Estate is by trying to go the Solo and the Highway by yourself. Never in Real Estate ignore the law, never think that the Government or the Local Counties are bad or think that they are there to obstruct anybody. Never think that people are your enemies or any other way. Never stay insulated from REIA’s or any other Real Estate Network.
Success and Failure in Real Estate is always a choice and as any other business but Real Estate is one of the most Lucrative Business and safe Investments when we follow some simple steps and as I always say RESPECT can bring success to a Individual.
Samuel Rodriguez
