Shares of real estate investment trusts traded mixed Wednesday after a Stifel Nicolaus and Co. analyst upgraded the ratings of 13 companies on attractive pricing and other factors.
In a client note Wednesday, analyst David Fick lifted the stocks of 13 REITs to "Buy" from "Hold," including six office owners, four industrial and triple-net REITs, two shopping center owners and one mall REIT.
Fick acknowledged the current economic troubles and turmoil in financial and credit markets, but also said that indiscriminate selling offers an attractive entry point for REIT investors.
"The entire investment universe is scarred," the analyst wrote. "REITs are pricing in terrible news during a lull in the storm's eye."
He noted the market is pricing in a depression economy and continually frozen credit markets, which he believes is an unlikely scenario. He predicts that at some point in two years, "reasonable credit will be available to reasonable borrowers on reasonable terms," and REITs will benefit.
However, until that time, Fick said that REIT stocks will continue to be volatile. The 20 biggest up and down days in REIT history occurred this year.
Risks to his outlook include a continued choke hold on credit, job losses, a thrifty consumer, another 20 percent decline in housing prices and reduced tenant demand.
SL Green Realty Corp. was the biggest winner of the 13 REITs, with its shares climbing $1.69, or 11 percent, to $17.38 in late morning trading.
Meanwhile, CapLease Funding set a 52-week low of $1.50 earlier in trading. Its stock plunged 22 cents, or 11 percent, to $1.72.
The stock of Simon Property Group Inc. rose three cents to $48.04. Regency Centers Corp. shares rose 96 cents, or 2.9 percent, to $33.70, while the stock of Weingarten Realty Investors added 40 cents to $13.82.
AMB Property Corp. shares rose $1.52, or 9.8 percent, to $16.96, and ProLogis stock added a 11 cents to $3.39.
National Retail Properties Inc. increased 35 cents, or 2.7 percent, to 13.17, while Highwoods Properties advanced 15 cents to $21.92.
Liberty Property Trust gained 66 cents to 17.74, and Kilroy Realty Corp. rose 80 cents to $29.55
Duke Realty Corp. rose 14 cents to $7.79, while Boston Properties Inc. moved ahead 9 cents to $52.47.
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