REITs: Is Housing Seeing a Recovery?

The National Association of Home Builders/Wells Fargo housing market index closed at a level of 28 today, which is the highest level since June of 2007 other than last month's downward revision from 29, according to Steve Goldstein of MarketWatch. Though the index implies positive sentiment, economists polled by MarketWatch expected the level to be at 29. Economists at Goldman Sachs said, "Overall the report was only a minor disappointment, and the level of the index remains consistent with steady improvement in the single-family housing market, in our view."

Of the different components in the index, the one that measures current sales conditions dropped a point to 29, but the one measuring expected future sales rose 2 points to 36, which is the highest level in over four years. The component that measures the amount of traffic of prospective buyers did not change from its level of 22. Builders are still cautious, and the index still reflects that. It is designed to indicate "good" conditions with any level over 50, but that hasn't been reached since April of 2006.

Though the level is still low compared to a "good" reading, we are seeing levels that are twice as high as they were six months ago. NAHB Chief Economist David Crowe said that the number of distressed homes on the market is still a major obstacle, and that credit is tight for both buyers and builders.

Business section: Investing ideas
Here is a list of REITs that have been seeing net institutional purchases over the current quarter, indicating they expect these names to outperform. REITs can give investors exposure to the real estate market without producing the risk of holding an illiquid asset. Do you think the housing market will see a comeback in the foreseeable future?

List sorted by market cap. (Click here to access free, interactive tools to analyze these ideas.)

1. Health Care REIT (NYSE: HCN  ) : Engages in investment, development, and management of properties. Market cap at $7.43B. Net institutional purchases in the current quarter at 11.8M shares, which represents about 6.17% of the company's float of 191.25M shares

2. Senior Housing Properties Trust (NYSE: SNH  ) : A real estate investment trust (REIT), primarily invests in senior housing properties in the United States. Market cap at $3.62B. Net institutional purchases in the current quarter at 6.4M shares, which represents about 3.95% of the company's float of 162.21M shares

3. Douglas Emmett: Operates office and multifamily properties in California and Hawaii. Market cap at $3.16B. Net institutional purchases in the current quarter at 5.5M shares, which represents about 4.26% of the company's float of 129.15M shares

4. BioMed Realty Trust: Operates as a real estate investment trust (REIT) that focuses on providing real estate to the life science industry in the United States. Market cap at $3.03B. Net institutional purchases in the current quarter at 20.6M shares, which represents about 13.63% of the company's float of 151.13M shares

5. Equity LifeStyle Properties: Is a publicly owned real estate investment trust (REIT). Market cap at $2.84B. Net institutional purchases in the current quarter at 2.4M shares, which represents about 6.21% of the company's float of 38.66M shares

6. Tanger Factory Outlet Centers: Operates as a real estate investment trust (REIT). Market cap at $2.70B. Net institutional purchases in the current quarter at 4.5M shares, which represents about 5.33% of the company's float of 84.50M shares

7. American Capital Agency (Nasdaq: AGNC  ) : Operates as a real estate investment trust (REIT). Market cap at $1.90B. Net institutional purchases in the current quarter at 24.6M shares, which represents about 10.98% of the company's float of 224.05M shares

8. RLJ Lodging Trust Common Shares: Is an independent equity real estate investment trust. The firm also manages real estate funds. Market cap at $1.87B. Net institutional purchases in the current quarter at 20.4M shares, which represents about 20.91% of the company's float of 97.55M shares

9. Brandywine Realty Trust (NYSE: BDN  ) : Is a publicly owned real estate investment firm. Market cap at $1.65B. Net institutional purchases in the current quarter at 5.3M shares, which represents about 3.78% of the company's float of 140.36M shares

10. Glimcher Realty Trust (NYSE: GRT  ) : Operates as a real estate investment trust (REIT) in the United States. Market cap at $1.19B. Net institutional purchases in the current quarter at 8.4M shares, which represents about 7.37% of the company's float of 114.04M shares.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.


Kapitall's Danny Guttridge does not own any of the shares mentioned above. Institutional data sourced from Fidelity.

Motley Fool newsletter services have recommended buying shares of Health Care REIT. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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