Office property REIT Parkway Properties
For the quarter, same-store revenue was up 3% thanks to improved occupancy, same-store net operating income was up 8.9%, and funds from operation per share were up 8.5% to $1.02 per share.
In terms of outlook, the company backed its full-year $3.80-$4.00-per-share FFO guidance for 2007, which would give the company a 13-14 forward FFO multiple. Management noted in the earnings call that capitalization rates in some cases had dropped to below its short-term borrowing costs, partly because of an influx of competition from public and private real estate investors. This is both good and bad -- lowering cap rates means that the company's existing properties are worth more, but it also means that the company's reinvestment opportunities aren't as good.
As we saw at HRPT
Parkway's stock has been on a tear, so the share price isn't a screaming buy. Management pegged the company's net asset value at $52 to $59 per share, based on a 7%-7.5% cap rate, so it looks like the shares are about fairly valued.
Fool contributor Emil Lee is an analyst and a disciple of value investing. He doesn't own shares in any of the companies mentioned above. Emil appreciates your comments, concerns, and complaints. The Motley Fool has a disclosure policy.