The recent housing boom and its low interest rates have stolen some attention from the humble practice of renting, and in turn, from apartment REITs. While the likes of AvalonbayCommunities (NYSE:AVB) and Equity Residential (NYSE:EQR) have performed well over the last five years, they haven't enjoyed quite the same performance as, say, storage REITs like Public Storage (NYSE:PSA). That's with good reason; the operating environment hasn't been nearly as kind, especially to BRE Properties (NYSE:BRE).

BRE Properties reported third-quarter earnings yesterday after the market closed. Straight year-over-year comparisons were not impressive, but that's largely due to asset sales and costs associated with new property construction. Consequently, revenues were up 15% to $76.8 million in the quarter, but funds from operations (FFO) per diluted share fell 10.5%, and net income declined by 43% to $0.13 per share. Investors brushed off the lower numbers, sending the stock up marginally in today's trading.

BRE's dividend yield remains above most of its peers at 4.7%. It's also above the 3% threshold we look for in our Motley Fool Income Investor service. One must remember, however, that income investing is also about attractive valuations and the safety of the dividend. On the last measure, BRE isn't quite there, because the dividend sits at 95% of its estimate for full-year FFO (75-80% is the average payout ratio for the industry). To be sure, the company has not announced any plans to cut its dividend, and the properties the company is adding over the next few years present a decent potential for FFO growth.

BRE offers an interesting opportunity for the future. Its focus on the fast-growing and youthful West Coast --California in particular -- means that the company should benefit as higher interest rates eventually swing the pendulum back to renting from buying. In addition, the company has a number of new properties in development that are slated to roll out over the next few years. With markets naturally being volatile, in the near term BRE might eventually trade at an attractive discount to its fair value. For that reason, I'm planning to add it to my watch list of companies.

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Nathan Parmelee has no financial stake in any of the companies mentioned. The Motley Fool has an iron-clad disclosure policy.