With fears escalating that the housing party is over, investors are bailing out of real estate plays. But Lisa Kaufman, managing director at LaSalle Investment Management, remains upbeat on Federal Realty Investment Trust (FRT ) (FRT), which develops, manages, and owns shopping centers on the East and West Coasts. Federal's stock, of which LaSalle owns 3.5%, has been rising in spite of the plunge in other housing stocks and most REITs. Federal's stock raced from 55 in mid-May to 65 on Nov. 22. Kaufman says its properties have the highest-quality values in its peer group. They are in such places as Santa Monica and San Jose, Calif., and the fast-growing, high-density, upper-income Virginia suburbs of Washington. Philip Martin of investment outfit Stifel Nicolaus expects Federal to earn $3.04 a share in 2005 and $3.31 in 2006, up from 2004's $2.85. Martin calls Federal a "best-in-class REIT" that deserves a "premium valuation." He sees it at 72 in a year.
Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.
By Gene G. Marcial