UPFRONT: WALL STREET WATCH

APARTMENT FINANCE TODAY • MARCH 2008

AFT Index Drops Modestly

By Margot Crabtree

Although the real estate investment trust (REIT) sector was punished as this session ended March 10, 2008, the damage was not as severe as to the major markets. The AFT Index was off only 10.65 points, or 1.18 percent, while the Dow industrials were down more than 4 percent, the S&P 500 slipped nearly 5 percent, and the tech-heavy Nasdaq was off 6.5 percent for the session. Although REITs have fallen in this downturn, some analysts note that the sector is cushioned from the worst of the fallout.

“REITs are a wonderful asset class to have in a portfolio because their long-term returns are the highest of the major asset classes if you go back to their origination in 1962,” said John Merrill, chief investment officer at Tanglewood Capital Management in Houston. “Yet they have a more modest risk. From a risk-return standpoint they’ve just been an outstanding asset class.” Of the apartment sector in particular, Michael Cohen of Atlantis Asset Management said, “Given that people still can’t afford to buy and the real estate market is basically on hold, people are going to rent and wait it out. That bodes very well for the apartment REITs.” The AFT Index closed our session at 893.13.

The national markets were still hamstrung by surging oil prices, poor earnings outlooks, and continuing worries over the health of the economy. As our session closed, oil spiked over $108 a barrel, and a general bearish sentiment made volatile markets vulnerable to negative rumors and dismissive of positive reports. “There is a growing sense that the Fed is trying to pull out all the stops and use all the tools they have, but with little net effect,” said Craig Peckham, equity trading strategist at Jefferies & Co. “It just doesn’t appear to be the quick fix that investors had been hoping for. What we've seen is people continuing to press very bearish bets.”

Shares of Camden Property Trust rose $2.44, or 5.31 percent, and ended at $48.43. Camden was ranked No. 5 in the REIT category in a survey by Institutional Investor magazine, which rated companies according to their shareholder-friendliness. The study looked at 57 sectors, and evaluated companies’ investor relations and corporate governance, and how those factors relate to shareholder value. Camden Property Trust was the top dollar and percentage gainer this session.

Aimco dropped $2.28, or 6.47 percent, this session and was the top dollar loser. Aimco reported that CEO Terry Considine received no compensation in 2007. The company reported funds from operations for the year of $325.4 million. Those figures did not meet the target which would have triggered a stock option of $600,000 in salary. Because the company did not meet those targets, Considine forfeited the options, according to an Associated Press report. Aimco closed at $32.96.

Centerline shed $1.54 and closed at $4.17 after the company swung to a loss in its fourth quarter. Centerline reported a loss of $59.4 million, or $1.04 per share, versus earnings of $7.8 million, or 14 cents per share, a year earlier. Revenue was up 27 percent, to $162.3 million. After the company’s stock tumbled, Centerline reiterated its 2008 guidance of $1.00 to $1.10 per share, and said it was unaware of any reason for the stock’s volatility. Centerline was the top percentage loser.

AFT Index Gainers and Losers

$ Gainer -Camden Property Trust: 2.44
$ Loser -Apartment Investment and Management Co. (AIMCO): -2.28

% Gainer - Camden Property Trust: 5.31%
% Loser -Centerline Holding Co.: -26.97%
Advancers - 5
Decliners - 9

Source: Trade Trends, Inc., (509) 327-1279