Analyst predicts modest year for REIT returns

  • Comments
  • Print
Listen to this story

Subscriber Benefit

As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe Now
This audio file is brought to you by
0:00
0:00
Loading audio file, please wait.
  • 0.25
  • 0.50
  • 0.75
  • 1.00
  • 1.25
  • 1.50
  • 1.75
  • 2.00

An analyst delivered his outlook for real estate investment trusts Wednesday, saying investors can expect modest returns from REIT stocks this year.

Indianapolis is home to two of the nation's biggest REITs: Simon Property Group and Duke Realty Corp.

Goldman Sachs & Co. analyst Jonathan Habermann expects a return of 5 percent to 10 percent this year after last year's 29-percent total return for REIT stocks.

"At the same time, given the improving growth outlook for the U.S. economy combined with still low interest rates, we simply do not see significant downside for the shares," he wrote.

Habermann maintained a "Neutral" view on the REIT industry. He said Goldman's equity analysts expect the Standard & Poor's 500 index to rise to 1500, a 21-percent increase, by the end of 2011. REITs however, may grow more modestly, by as much as 10 percent. His top buy recommendations include Digital Realty Trust Inc.

Habermann also upgraded AvalonBay Communities Inc. to "Buy" from "Neutral" and raised the price target to $121 per share from $98.

Also upgraded to "Buy" from "Neutral" was Vornado Realty Trust. The price target was boosted to $92 from $89.

Duke Realty was upgraded to "Neutral" from "Sell" on an improved balance sheet and portfolio. A price target of $12 was retained.

Please enable JavaScript to view this content.

Editor's note: You can comment on IBJ stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Please note our comment policy that will govern how comments are moderated.

Get the best of Indiana business news. ONLY $1/week Subscribe Now

Get the best of Indiana business news. ONLY $1/week Subscribe Now

Get the best of Indiana business news. ONLY $1/week Subscribe Now

Get the best of Indiana business news. ONLY $1/week Subscribe Now

Get the best of Indiana business news.

Limited-time introductory offer for new subscribers

ONLY $1/week

Cancel anytime

Subscribe Now

Already a paid subscriber? Log In

Get the best of Indiana business news.

Limited-time introductory offer for new subscribers

ONLY $1/week

Cancel anytime

Subscribe Now

Already a paid subscriber? Log In

Get the best of Indiana business news.

Limited-time introductory offer for new subscribers

ONLY $1/week

Cancel anytime

Subscribe Now

Already a paid subscriber? Log In

Get the best of Indiana business news.

Limited-time introductory offer for new subscribers

ONLY $1/week

Cancel anytime

Subscribe Now

Already a paid subscriber? Log In