REIT
lamlam
Deliverables.docxDeliverables:
1) A Property Sector Overview and Outlook. (Length: 3,500+ words, including plus charts, tables, graphs). You may want to organize by performing a SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats), Macroeconomic Outlook, political Implications (if any).
Part 1: Property Sector Overview:
The goal for Part 1 is to provide the reader with a good understanding of the property sector in which the subject REIT operates (Malls, Industrial, Apartments etc). Specifically,
• Define and Describe the Sector: “There are 40,000 Self-Storage facilities nationwide; REITs collectively own 18% ….” “Office Sector broadly includes both downtown skyscrapers and suburban office parks….” What are the economic drivers of the sector? How does one make money?
• Industry Status: Disruption? Rapid Growth? COVID-19 Impact? “Retail has suffered greatly as online shopping continues ro take its toll; however, there are some glimmers of hope…”
• Changing Tastes, Tenant Preferences, Demand Drivers: “Compared to five years ago, office tenants today want shorter lease terms, more flexibility, and more services to be provided by the landlord or third parties…
• Supply and Demand: What impact will new supply have on existing market dynamics? Likely to increase or decrease rents, increase or decrease occupancy…. “Although there are relatively low barriers to new construction, Industrial development has been fairly constrained, which has allowed landlords to raise rents
• Regulatory, Political Considerations (if any): What would happen to the sector if power shifted to left….“A Democratic sweep in 2020 could boost Medical Office property demand, as health care providers continue to favor shorter hospital stays and more ambulatory services and procedures…”
• Ownership, Fragmentation, Cap Rates: Who owns the properties? (Institutional Investors or Entrepreneurial Owner/Operators?) Is ownership highly fragmented or concentrated? Where are Acquisition cap rates and what has been the trend? Capital expenditure requirements for maintaining the income producing qualities of the property?
• Sector Recommendation: Overweight or Underweight. If you conclude that the property sector is likely to provide higher than average returns (compared to REIT Universe average) then you should recommend and Overweight position.
• Risks; What Can Go Wrong with Your Recommendation? 3-5 Bullets
It’s important to recognize that you may recommend a Sector Allocation of Overweight but the subject REIT is rated a Sell (or vice versa) for company -specific reasons as discussed in your report.
