Post #3

Simon Properties:  Simon is a very well known REIT that is known as being the biggest owner of malls across the United States. Simon usually runs very upscale and high rent malls that share common characteristics among each other. I feel as if Simon is a good way to invest in malls in the United States, however that sector seems to be a questionable one at the moment. While Simon is the most attractive in their market segment, their is a clear trend showing increasing vacancies in malls in the United States. If that trend continues it will severely hinder the profitability of a company like Simon because of their focus on an individual market segment.

 

Weingarten Realty: Weingarten started as a very different company than the one that is currently seen on the market. Weingarten started as a company that dealt exclusively with grocery stores across the United States. However, later in the 1980's they changed into REIT that dealt heavily in different shopping centers, and no longer was solely focused on grocery stores. They now invest in fields with higher barriers to entry and larger population densities. A large portion of their portfolio is in Texas but they have many locations throughout the United States as well.

HCP Inc.: HCP Inc. deals primarily with companies in the healthcare industry, which happens to be the highest grossing industry in real estate. What really caught my attention with this company is their amazing track record with increasing dividends for 27 years straight. HCP has found a successful niche in the real estate market that I feel helps them cement themselves as a good sell in the marketplace. With healthcare demand increasing along with prices, the demand for real estate in this sector will continue to grow at a rapid pace. HCP is a company I would expect to continue the trend of ever-increasing dividends for their investors.

Public Storage: Public Storage is a REIT that most people have heard of but don't know a lot about the industry. Public Storage is a company that usually benefits from peoples misfortune and gains most of their new clients that way. While that may not sound like the best way to gain customer loyalty they are offering a product that is growing in demand. With increasing populations in the United States and smaller living areas public storage sees a great opportunity to grow into the future. Not only does Public Storage want to grow the market, they are also interested in gaining in market share, because right now the market is highly segmented.

SL Green Realty Corp.: SL Green mainly does its business in the Manhattan area by acquiring properties and then redeveloping them and renting them out. There properties are usually office buildings and they have recently greatly increased their portfolio by acquiring a similar smaller company. They have their properties over 90% full on average and have continued to grow. With the extremely valuable land in the areas the company invests it is crucial to make wise financial decisions.

Taubman: Taubman is involved in the market of United States malls in areas that they feel are the most productive markets.  A large percentage of their portfolio is made up of their anchor tenants such as Macy's, Dillard's, and Neiman Marcus. Some of their properties are quite unique in appearance and the shops at Willow bend in Plano is considered one of the pretties retail spaces in the nation. However, in comparison to a REIT such as Simon, Taubman is a much smaller part of the mall market. Returns for Taubman are pretty impressive but cant match those of the larger players in the business.





Post #2

Topic 1:

Link 1: http://www.investmentu.com/realestateinvestmentadvice.html

         -Investing in real estate can be worthwhile if done right, however it has some negatives to go along with all the positives. While the average return is higher than the yield on treasury bonds it can also be a much riskier asset. While it stays competitive with similar stocks, it is also not liquid like most stocks are.

Link 2: http://beginnersinvest.about.com/od/realestate/a/Types-Of-Real-Estate-Investments.htm

        -The above link described basic tips for those considering investing in real estate. Unlike investing in stocks or bonds you can have personal liability if something bad happens at your property. So the article described ways around facing such liabilities by creating LLC's. It also describes the various different types of real estate investments that are available to investors.

Link 3: http://beginnersinvest.about.com/od/realestate/a/Real-Estate-Investing-101.htm

        -Different ways you can make money off of real estate investing include: appreciation of real estate, as well as income earned off a property. Real Estate investing is described as quite a simple idea to make money however it is not as easy to execute well. While many properties can bring you steady cash flows it doesn't take much to bring down all of them with one bad decision.

Topic 2:

Article 1: “Information Explosion”, by Dr. Wayne Etter
         -Unlike the United States treasury market real estate suffers from a lack of investing information. For efficiencies to be created in the real estate market it would need more readily available information for all possible investors. However, lately the gap has started to shrink with the increasing influence of the internet. While real estate investing still isn't near as efficient as the market for treasury securities it is slowly decreasing the gap.

Article 2: http://online.wsj.com/article/SB115024278174379499.html  June 14, 2006
         -The analysis for College Station did not take into account some very big factors. It didn't look at the fact that a quarter of the population was comprised of college students which would greatly skew demand toward lower end housing. It also didn't take into account the fact that the market availability in the region was greater than the national and regional averages.

Article 3: http://www.kennedyusa.com/pdfs/RE_efficientmarket.pdf
         -Due to lack of some vital information the real estate market is not really efficient. It is becoming more efficient but still has a long way to go. Part of the lack of efficiency helped lead to the housing bubble that has caused so many problems with housing. Even with all this in mind though, not every aspect of being inefficient is a bad thing for the housing market.

Topic 3:

Article 1: http://recenter.tamu.edu/pdf/1051.pdf    Fall 1994
       -For direct capitalization you just have to divide the given NOI by the capitalization rate. When looking at discounted cash flow you have to estimate changes in the NOI over time, which will help to show gains you expect to make since the starting year. DCF however is just an unnecessary task when there is no vacancy and the property brings in a steady NOI year after year.

Article 2: Comparative Capitalization Rate Study       April 2010
        -Cap rates used rarely take into account certain market factors that could effect the investment. So there are many different parameters that you should consider before you settle on a certain cap rate. Also cap rates historically are lower the more expensive the property is. So budget real estate usually demands the highest cap rate, due to the excess variables that are typically in place.

Article 3: http://recenter.tamu.edu/pdf/1145.pdf            Fall 1996
        -When choosing between real estate investments of similar risk a buyer should compare them all using the same rate of return method. IRR is a good way to compare all properties and value them against each other by seeing which has the highest percentage return. When looking at IRR you also have to take into account the different amounts that you will have to discount that to make up for loans and other expenses that are involved in the process.

Name: Brian Engstrom

Major: Finance

Graduation Date: May, 2013

hometown: Round Rock, TX

hobbies: fly fishing, rock climbing, photography