Barclays Capital
This is a perfect example of why Barclays has problems. They are out of touch with reality.
BARCLAYS RAISES U.S. REITS TO POSITIVE
Jan 20 (Reuters) - Barclays Capital raised its rating on the U.S. real estate investment trust sector to “positive” from “neutral” on valuation and said it expects the companies in the sector to report better results in the fourth quarter.
“While sentiment has improved slightly, we believe that the market is still pricing in a significantly more bearish outlook than our own,” analyst Ross Smotrich wrote in a note to clients.
“Nevertheless, this earnings season will likely be highlighted by a host of impairment and one-time charges related to abandoned development projects, land holdings and securities investments,” the analyst said.
Smotrich, who cut his price target on a number of REIT stocks, expects the companies’ 2009 guidance to include a “very conservative” economic outlook and wide guidance ranges.
He said mall and office REITs will deliver the best funds from operations in the quarter, while industrial, shopping centers and multifamily REITs will see a significant drop in theirs.
Barclays also said the real estate industry will likely outperform the broader equity markets in 2009 if the debt markets return to “normalcy.”
However, it said if the U.S. government’s intervention fails to bring some stability to the debt markets, REITs will underperform due to the capital intensive nature of the business.
It expects a 3 percent drop in FFOs in 2009 and a 2.5 percent growth in 2010.