For Immediate Release

Chicago, IL - June 3, 2009 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Avalon Bay (AVB), Boston Properties (BXP), Carter's (CRI), O'Reilly (ORLY) and 99 Cents Only (NDN).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=4579.

Here are highlights from Tuesday's Analyst Blog:

REITs Continue Their Run

Equity REITs are now trading closer to the value of their assets. Although as a group, REITs are still trading below net asset value. Although, underlying fundamentals cannot be ignored. 1Q results among companies we cover were generally unspectacular and operations are deteriorating in all major property types:

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REITs continued their run in May, increasing about 3%. Quarter-to-date, REITs are up over 33%, mostly due to an April rally. REITs are still down about 8% for the year.REITs have recovered due to several factors: 1) The credit markets are continuing to improve and banks are starting to lend again, due in part to the governments money that is flowing to banks 2) Many REITs continue to issue new equity, which has been well received by investors 3) REITs are focusing on their balance sheets,  paying down debt, reducing costs and development , which reduces risk and makes for leaner companies 4) Investors seem to be more optimistic about the state of the economy going forward, and 5) In March, REITs fell to possibly once-in-a-lifetime prices which spurred buying.Equity REITs are now trading closer to the value of their assets. Although, as a group, ...

Regency Centers Corp. (REG) announced today that the company has priced its 8.7 million share offering at $32.50 per share. The underwriters have been granted an option to buy an additional 1.3 million shares.REG is following several REITs who have recently announced equity sales. Investors have generally reacted positively to REIT equity sales. Shares of REG are up nearly 4% today.Although, the sales are dilutive to existing shareholders as many companies are still trading near multi year lows. In addition, new share issues also increases the probability of a dividend cut. REG just announced a 41% decrease in its quarterly dividend.REITs selling equity at depressed prices highlights one of the flaws in the REIT model. REITs are required to pay out 90% of taxable income in dividends. As such, retained earnings are minimal and companies must use debt or equity to grow. ...

American Capital Agency Corp. (AGNC) is a REIT that focuses on investments in mortgage pass-through securities and collateralized mortgage obligations (CMOs).AGNC reported 4Q08 net income of $11.0 million or $0.73 per share on revenues of $17.1 million. The company reported a 16.5% annualized return on equity in 4Q08. Net interest spreads were 1.19% during the quarter, well below last quarter. Higher funding costs and lower mortgage rates are having a negative effect on spreads.In addition, pre-payments should increase at a rapid pace over the next couple of quarters, which will negatively affect interest income. We continue our Hold rating. Leverage is low at about 5x, and AGNC only invests in government guaranteed mortgages which somewhat insulates the company from the falling housing market.Muddling the picture for agency REITs is the prospect of continued government intervention in housing. Hold the shares for the ...

Highlights include Avalon Bay Communities, Inc. (AVB) and Vornado Realty Trust (VNO).

Equity REITs posted somewhat of a comeback last week after a rough 1st quarter. So far in March, REITs have rebounded 7% (total return FTSE NAREIT Index). All sectors are up in March; the best performing sectors were apartments (16% return), industrial (16%), and lodging (15%).

Overall, REITs are still down 30% so far in 2009, well behind the S&P and Dow. The March mini-rally is nothing to get excited about, and the sector could continue to sell off. Here's why:   

1) REITs still depend on access to debt to fund growth, and with the credit markets still frozen, it will be difficult for companies to raise cheap debt     2) Going forward, ...

Contrary to popular belief and Wall Street propaganda, investing is not a competitive event. Rather, it is a uniquely personal, goal-directed activity that individuals must organize and control for themselves. Too few appreciate that it is a long-term enterprise and only a handful, at best, have discovered that DJIA and S & P 500 numbers are only useful at their extremes.

You need to be buying when the doom and gloom is thick enough to cut with a knife, and selling at reasonable profit targets when the averages seem like they can only go up.

As much as you love (or loathe) to hear about quarterly market value numbers and comparisons with one of the averages over short-term blinks of the investment eye, you will not be accommodated here. Rather, we’re going to talk about investing, and some more meaningful numbers that …

a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/_7ZckZ-8naz0/SURMYd2MuSI/AAAAAAAACPg/yJrBWZdBMAA/s1600-h/Fenway+028.jpg"img style="margin: 0pt 10px 10px 0pt; float: left; cursor: pointer; width: 400px; height: 300px;" src="http://4.bp.blogspot.com/_7ZckZ-8naz0/SURMYd2MuSI/AAAAAAAACPg/yJrBWZdBMAA/s400/Fenway+028.jpg" alt="" id="BLOGGER_PHOTO_ID_5279428646397589794" border="0" //abr /Barron's had a href="http://online.barrons.com/article/SB122912511986803009.html?mod=9_0031_b_this_weeks_magazine_mainamp;page=sp"an article about reallocating retirement portfolios/a that have been derailed by the current bear market. There were comments from people citing statistics that have favored certain asset classes before and presumably these folks were relying on these statistics again. For example there was a quote about buying REITs when they yield more than ten year treasuries and that currently (per the article) REITs yield three times that of treasuries. The obvious question not addressed was whether the folks quoted bought REITs when the yield first surpassed the yield on treasuries. That would seem to be the implication and so as that was wrong how do we know that now it would be right?br /br /A case was made for various segments of the ...

“Not all REITs are created equal,” notes income expert Richard Lehmann.  Here, he takes a look at the Neuberger Berman Real Estate Income Trust in his Forbes Lehmann Income Securities Investor.

“The decline in Real Estate Investment Trusts (REITs) has been sharp, reacting to the mortgage crisis and the associated financial meltdown. However, here are sectors of the real estate market that have not been affected by the mortgage crisis.

“Such sectors like health care and multi-family projects and self-storage buildings are relatively less sensitive to the economic cycle. In addition, these sectors may have an inverse benefit from foreclosures such as rental properties and self-storage.

“The Neuberger Berman Real Estate Securities Income Trust fund invests in REITs in defensive areas such as health care and multi-family projects. Common stocks of REITs are trading at a discount to the properties they own, a reversal of premiums evident in last year.

“This closed

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The four big asset classes are stocks, bonds, cash and real estate. Direct ownership of real estate is the pure form of the asset class. To achieve diversification within the financial capability of most investors, securitization of a direct real estate portfolio (REITs) is a second best solution.

REIT vs REAL ESTATE FUNDS:

The problem with publicly traded securitized real estate is that it takes on some of the characteristics of stocks, and loses some of the distinctions of the direct real estate asset class. Except in bubble times, the yield of REITs also tends to make them trade a bit like bonds. Overall, REITs are hybrid in nature, but still generally thought of as a separate asset class more than as a separate sector within the stocks asset class.

Because REITs are not as widely authorized internationally, and because of investor demand …

It is ironic that US REITs year-to-date have outperformed US stocks, non-US developed market stocks, and emerging market stocks, as well as directly owned commercial and residential real estate. Only commodities have outperformed REITs so far this year.

VNQ, ICF, IYR and RWR are still down from 17% to 20% on a trailing 12-month basis, but they provide a 12-month distribution yield of from 3.90% to 4.75% which is more than the current 10-year T-Bond rate of about 3.70%.

How vulnerable REITs are to a reversal of fortune is unclear.  If the economy is as vulnerable to major recession as some say, the rental income of REITs may not prove as strong as expected, which would tend to lower the distribution yield.  Continued outperformance itself, would reduce the yield rate.  …