Commercial real estate market drying up
Posted
Jan 06 2009, 02:53 PM
by
Kim Peterson
Rating:
After a red-hot run not too long ago, dealmaking in the commercial real-estate business is slowing down, The New York Times reports.
Last year, there were some 1,400 deals across the country, valued at $49 billion. That's down from 4,400 deals the year before valued at $207 billion. And the market's future doesn't look too promising, with companies laying off hundreds of thousands of employees and trying to ditch office space they don't need. Office vacancies are at more than 13% nationwide.
That means more crazy times for investors in real estate investment trusts (REITs) -- both commercial and residential. These stocks have seen wild swings this year, the Wall Street Journal reports, because their typical light trading patterns make them easy to manipulate by the leveraged exchange-traded funds that make big plays at the end of the trading day.
Yet REIT investors are a positive bunch. Some of the biggest stocks plunged to remarkable lows in the fourth quarter, but have started to tick up since then. Let's see how a few REITs have held up over the last year:
ProLogis (PLD): This stock saw an astounding 94% drop from the spring, but shares have been climbing in the last month to around $16. Late last month, the company said it was getting out of the Chinese market and selling its stake in Japan, raising $1.3 billion that will go to paying off debt.
Boston Properties (BXP): One analyst is praising this company because it has lease terms that are longer than average, perhaps seven years or more. The company is known for a high-quality office portfolio, and isn't seeing the occupancy lows that others are. Boston's stock has fallen over the past year, just like everyone else, but it has held stable at $55 since early December.
Vornado Realty (VNO): This REIT had a pretty good third quarter, and its strong presence in urban areas has put it in a better position going into 2009 than some competitors, according to analysts at Zacks.com. Shares hit the $100 mark in September but have since fallen to around $60.
Highwoods Properties (HIW): A strong office property owner and operator in the Southeast. Shares are almost at where they were a year ago. Perhaps that's because Highwoods' third-quarter results showed an increase in revenue from the year before. Net income and occupancy had also improved in the quarter.
AMB Property Corp. (AMB):
This industrial REIT was well over the $50 mark for the first half of
the year, but plunged below $15 in November. Lately, though, the stock
has been climbing to the $25 range.
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