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A Reit For The Long Haul

Inside Wall Street


Don't bet the house on an upturn in the commercial real estate market. But you might want to make a side bet on Property Capital Trust, a real estate investment trust that trades on the Amex at 5. Robert S. Natale, editor of Standard & Poor's Emerging & Special Situations, believes that investors who can hold on for the real estate recovery will ultimately quadruple their capital.

Natale thinks PCT--which traded as high as 27 in 1987 and as low as 4 last year--has its worst days behind it. Most of some $200 million in properties and the properties underlying its mortgages were built before the mid-1980s. That means assets were not acquired at top-of-the-market prices, so risks of further large write-offs are low. Still, PCT is not yet in the black. Natale is projecting a loss of 75 a share for the fiscal year ending July 31, an improvement over the $1.23 per share loss in fiscal 1991. Book value is over $11 a share, and that, he thinks, will prevent the stock from slipping.

In its heyday, PCT earned an 8% return on assets. But now, Natale's shooting for a 6% return. That would produce earnings of $1.30 a share. By his reckoning, it's enough to merit a stock price of over $20 a share.JEFFREY M. LADERMAN

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