Zacks Industry Outlook Highlights: Simon Property Group, Taubman Centers and Ventas
CHICAGO, March 6, 2013 /PRNewswire/ -- Today, Zacks Equity Research discusses the U.S. Real Estate Investment Trusts (REIT), including Simon Property Group Inc. (NYSE: SPG), Taubman Centers Inc. (NYSE: TCO) and Ventas Inc. (NYSE: VTR).
A synopsis of today's Industry Outlook is presented below. The full article can be read at
In 2012, most of the sectors in the REIT market performed well and reported double-digit returns. The standout performance in the industry was that of the Timber REITs (a total return of 37.05% as measured by the FTSE NAREIT Equity REITs Index, followed by Industrial (31.28%), Infrastructure (29.91%), Retail sector (26.74%), Health Care (20.35%), Self-Storage (19.94%), Lodging/Resorts (12.53%) and Diversified REITs (12.20%). The relatively underperforming sector was Residential (6.94%).
We are bullish on Simon Property Group Inc. (NYSE: SPG), the largest publicly traded retail REIT in North America, with assets in almost all retail distribution channels. Its international presence gives it a more sustainable long-term growth story than its domestically focused peers. The geographic and product diversity of this Zacks Rank #2 (Buy) company also insulate it from market volatility to a great extent and provide a steady source of income.
In addition, Simon Property generally enters into long-term leases with companies, which insulate it from short-term market swings that have weighed on other players in the industry. With a favorable supply/demand relationship, rising earnings estimates, robust growth projections, and a healthy dividend rise (announced simultaneously with its fourth quarter earnings release), Simon Property offers an enticing upside potential going forward.
We are also bullish on Taubman Centers Inc. (NYSE: TCO), which owns, develops, acquires and operates regional and super-regional shopping centers throughout the U.S. and Asia. This Zacks Rank #2 (Buy) REIT focuses on dominant retail malls that command the highest average sales productivity in the U.S., measured in terms of mall tenants' average sales per square foot.
Furthermore, the shopping centers are located in the most affluent regions of the country, thereby enabling retailers to target high-end upscale customers and maximize their profitability. This, in turn, has enabled Taubman to command relatively premium rents for its portfolio, thereby ensuring steady top-line growth. In addition, Taubman has one of the strongest balance sheets in the sector with adequate liquidity. The company has also taken prudent steps to reduce its operating expenses.
Another stock worth mentioning is Ventas Inc. (NYSE: VTR), a leading healthcare REIT, primarily engaged in the business of financing, owning and leasing healthcare related and senior housing facilities.
Being one of the largest healthcare REITs in the U.S., this Zacks Rank #2 (Buy) REIT boasts a significantly diversified portfolio and exposure to nearly all types of facilities. Also, the healthcare sector is relatively immune to the downturn in the economy, and provides a steady source of income that protects the company from short-term market volatility.
We expect the company's strategic move in acquiring Atria and other opportunities to provide significant upside potential to the stock going forward. Moreover, we remain encouraged with the recent dividend hike announcement at Ventas.
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