Tags: mortgage | reit | investors | real estate

Barron's: Investors Should Consider Mortgage REITs PennyMac, Two Harbors, Starwood

Barron's: Investors Should Consider Mortgage REITs PennyMac, Two Harbors, Starwood

By    |   Monday, 12 October 2015 07:08 AM

Despite the uncertainty of interest rate increases, there is still reason for investors to embrace mortgage real-estate investment trusts (mREITs) that are creating operating businesses and can create their own investments, Barron's reports.

“In addition, we favor those mREITs with more stable book values and earnings outlooks in the current volatility. New Residential Investment (NRZ ), PennyMac Mortgage Investment Trust (PMT), Two Harbors Investment (TWO) and Starwood Property Trust (STWD) are our top picks in our mREIT coverage,” Credit Suisse told Barron's.

To be sure, it is a tricky investing environment for REITs.

Jon Gray, global head of real estate at Blackstone Group LP, the largest private equity investor in property worldwide, told Bloomberg that stock investors are too bearish on U.S. real estate, and the market’s decline probably will lead to more takeovers of publicly traded landlords, along with asset sales, said

“There’s a disconnect, and that creates opportunity,” Gray said at a recent conference sponsored by the Pension Real Estate Association in San Francisco.

The three-day event was held at the Westin St. Francis hotel on Union Square, one of 17 high-end urban and resort properties owned by Strategic Hotels & Resorts Inc., which Blackstone has agreed to buy in a $6 billion deal.

Real estate investment trusts are trading at discounts to the values of their properties on the private markets, enabling buyers such as Blackstone to sell off individual assets and reap gains that could exceed what they’re paying for the whole companies.

In addition to Strategic Hotels, Blackstone is interested in buying BioMed Realty Trust Inc., a San Diego-based REIT that rents office and laboratory space to biotechnology companies, people with knowledge of the situation have said.

In addition to more REITs being taken private, Gray said he expects additional asset sales similar to a Macerich Co. plan, announced Wednesday, to sell stakes in eight malls for $2.3 billion to fund a special dividend, share buybacks and debt reduction.

The Bloomberg REIT index has fallen almost 7 percent this year, about the same as the Standard & Poor’s 500 Index. Blackstone’s shares are down more than 27 percent from their record close of $43.96 in May, hovering around their 2007 initial public offering price of $31.

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Despite the uncertainty of interest rate increases, there is still reason for investors to embrace mortgage real-estate investment trusts (mREITs) that are creating operating businesses and can create their own investments, Barron's reports.
mortgage, reit, investors, real estate
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2015-08-12
Monday, 12 October 2015 07:08 AM
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