Zacks Investment Research Inc., Chicago, is suggesting investors can profit from the housing crash by investing in apartment real estate investment trusts. It provides a list of five of these REITs to be considered.
"The apartment REIT industry should experience a nice tailwind over the next several years as homeownership rates fall and apartment occupancy rates rise. These five stocks are a great way to ride this trend while enjoying solid dividend income along the way," the report said.
On two of those REITS, Associated Equities Realty Corp., and Post Properties Inc., Zacks has a strong buy rating. It notes that Associated Equities has been diversifying its portfolio away from the Midwest, where homeownership rates are higher and rents are lower, into higher growth, higher rent markets. "The move is paying off," it said, pointing out an increase in physical occupancy of properties in the portfolio and an increase in average net rent collected.
Post Properties, on the other hand, delivered its sixth consecutive positive earnings surprise in February, Zacks said.
Zacks has a buy rating on AvalonBay Communities. Average rental rates rose 2.9% in the fourth quarter of 2010. Also, Zacks expects a 16% increase in funds from operations in 2011 over 2010.
The other two REITS Zacks mentions, UDR and MAA, are currently given a hold rating. For UDR, Zacks highlights an "impressive" 20 basis point increase in physical occupancy in the fourth quarter 2010 to 95.6%. At MAA, physical occupancy increased to 95.8% for the fourth quarter.
