Analyst decries REITs sell-off

Raymond James & Associates Inc. analyst Paul Puryear upgraded eight real estate investment trusts today in the belief that the recent sell-off in the sector has been overdone. “Enough, already!” he wrote in a note. “Given our years of real estate experience, we can recognize compelling value when it appears.” Mr. Puryear said there’s been an “unprecedented sell-off among REIT stocks” that caused REIT prices plummet more than 30% so far in October. He blames “indiscriminant selling” by hedge funds, closed-end funds’ facing redemptions and broader market turmoil for the decline. The analyst, who works out of the company’s headquarters in St. Petersburg, Fla., office, raised his ratings on Digital Realty Trust Inc. (DLR) in San Francisco, Corporate Office Properties Trust Inc. (OFC) in Columbia, Md., and Essex Property Trust Inc. (ESS) in Palo Alto, Calif., to “strong buy,” from “outperform.” He also lifted Public Storage Inc. (PSA) of Glendale, Calif., Host Hotels & Resorts Inc. (HST) in Bethesda, Md., Simon Property Group Inc. (SPG) in Indianapolis, Equity Residential (EQR) in Chicago and Realty Income Corp. (O) of Escondido, Calif. to “outperform,” from “market perform.” Many of these REITs represent “the best-in-class REITs operating in various sectors,” with stronger-than-average balance sheets and the ability to weather tough economic times. Mr. Puryear wrote. Wednesday marked the largest-ever single-day decline in the REIT index, he said. So far in 2008, equity REIT returns, which include dividends, are down 22.1%, according to the National Association of Real Estate Investment Trusts of Washington. This still outpaces the Standard & Poor’s 500 index, which is off 30.9%.