Green Street Advisors Provide REIT Advice

In a Barron's article published this weekend, Green Street's president, Craig Leupold, and its director of research, Mike Kirby, spoke to Barron's about REIT's.

When asked how to approach the REIT sector, Kirby stated, "I have two pieces of advice. One would be to focus on real-estate investment trusts with higher-quality portfolios. REIT investors have a habit of focusing too much on funds-from-operations yield and dividend yield and not enough on growth potential. So portfolios of high-quality REITs are usually on sale at very pedestrian prices. The other major thing would be to focus on REITs that have below-average financial leverage."

In response to a question regarding his favorite REIT sector, Leupold said, "We don't have any major favorite, but malls may be an underappreciated group. Over a long span, malls have had superior growth in net operating income, or NOI, yet they rarely carry any premium to the rest of the sector."

Green Street Advisors is the leading independent research firm specializing in real-estate investment trusts. Green Street's Buy-rated stocks have generated a 25.2% annual return since 1993 according to Barron's.