Don't Pull Apartment REIT Chute in Case of Recession
Late last month, MarketWatch published an article as a result of UBS downgrading several apartment REITs (read the article). I was initially surprised by the headline because apartment REITs at-first-glance seem to be a recession parachute. In other words, as people hit hard-times I would assume they may be forced financially to return to apartment life. However, the UBS analyst (who make much more than me) noted the ever increasing supply of rental properties both as single-family homes and condo-conversions will put pressure on the apartment landlords.
The UBS report has proved prophetic. The stock prices in this sector have suffered. Not included on the UBS report, but specifically Mid-America Apartment Communities has dropped 10% since August 31, 2007 and decreased 14.5% since 10/31/2007.
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Dec.27.2007. 07:44
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