Washington real estate investment trust
Real Estate Investment Trusts come in many flavours. While Real Estate Investment Trusts broadly track the economy, the various real estate sectors respond to different stimuli. Office Real Estate Investment Trusts, the most numerous kind, are prey to the economic vicissitudes of the cities where they own property. The fortunes of health care Real Estate Investment Trusts are linked to Medicare reimbursement rates.
?Roughly speaking, Adjusted Funds From Operations (AFFO) is net income plus depreciation, minus upkeep costs, according to Real Estate Investment Trust analysts Green Street Advisors?.
This is what the Forbes article had to say about Washington Real Estate Investment Trust:
?Diversified. These invest in a variety of properties, meaning they have had a decent 26 percent total return year to date. The standout here is Washington Real Estate Investment Trust, with a hand in everything from offices to apartments. True to its name, this trust sticks to the Washington area, the fastest growing region for two decades. One of its buildings houses offices of the International Monetary Fund and the World Bank?.
Company profile:
Washington Real Estate Investment Trust, founded in 1960, invests in a diversified range of income producing properties. Management?s purpose is to acquire and manage real estate investments in markets it shows well and to protect the company?s assets from the risk of owning a single property type, such as apartments, office buildings, industrial parks, or shopping centers.
Washington Real Estate Investment Trust achieves its objectives by owning properties in four different categories. The trust?s properties are primarily situated within a two hour radius of Washington that stretches from Philadelphia in the north to Richmond, Virginia, in the south. At the end of 2004, its diversified portfolio consisted of sixty nine properties: thirty one office properties, eleven retail centers, nine multifamily properties and eighteen industrial properties.
According to the company?s report, geographic focus is based on two principles:
- Real estate is a local business and is much more effectively selected and managed by owners located and with expertise in this region.
- Geographic markets deserving of focus must be among the nation?s best markets with a strong primary industry foundation and be diversified enough to withstand downturns in their primary industry.
Shortcomings to bear in mind:
- Although Washington Real Estate Investment Trust is well diversified by type of property, it is not diversified geographically, since all of its holdings are within a two hour radius of Washington. In the event of a serious disaster in that region, Washington Real Estate Investment Trust might have problems. By contrast, many Real Estate Investment Trusts have scores of properties across the United States, thus shielding them from hard times or natural disasters in any one location.
- Value Line Investment Survey does not share enthusiasm for this stock. This issue is ranked to lag the market in the year ahead. The stock also offers lackluster total return potential out to 2007 to 2009. and although risk averse, income oriented investors may like Washington Real Estates record of 34 years of increasing dividends and its high safety rank, they should be able to find better selections elsewhere.
Reasons to buy:
- If you had invested $10,000 in Washington Real Estate at the end of 1971, your shares would have been worth $2,638,974 at the end of 2004.
- Over the last few years, they have become more focused on adding modern medical office buildings to the portfolio. Medical buildings, particularly new ones, located near growing, major hospital centers generally have very low volatility. In 2003, they acquired a three building medical office property, known as Prosperity Medical Park, located in Fairfax County, Virginia, near Inova Hospital. The buildings contain for staff and patients. At acquisition, the property was 98 percent leased and is now 100 percent leased.
- One aspect of this lower risk profile if that the greater Washington Baltimore technology sector achieves 38 percent of its sales to the federal government, as compared to 5 percent in Silicon Valley. That, along with the fact that federal government spending will continue to grow, provides a platform for a soft landing in this region.
- The Greater Washington, economy is a unique blend of ?old economy? service companies and ?new company? high technology growth companies, anchored by the very significant Federal government presence.
On the growth side:
- Washington Dulles International Airport and Baltimore Washington International Airport were ranked number one and two in passenger growth in 1999, the most recent year for which data are available.
- The Greater Washington region ranks first in the United States in high tech and bio-tech employment.
- George Mason University Center for Regional Analysis projects economic growth in the region of 4.1 percent in 2001, which is substantially higher than is projected for the nation as a whole.
- Federal spending in this region has increased every year for twenty one consecutive years, even in years when federal spending has decreased nationally. George Mason University projects spending in the region will grow by 3 percent per year. While growth is very important, from an investment perspective, economic stability is equally important. In this context, no other region in the country can compete with the Greater Washington region.
- Federal government spending accounts for 31 percent of the area?s Gross Regional Product.
- The Greater Washington region is not exposed to new or old economy manufacturing fluctuations.
- Greater Washington is home to thirty two colleges and universities, several of which have world class reputations at both the undergraduate and graduate levels.
? Prior to acquiring a property, Washington Real Estate Investment Trust performs extensive inspections, tests and financial analyzes to gain confidence about the property?s future operating performance, as well as any required near term improvements and long term capital expenditures. Upon completion of this evaluation, the company develops well informed operating projections for the property. Accordingly, when the company announces an acquisition and its anticipated return on investment, it is confident that the property will meet or exceed its projections.
? Washington Real Estate Investment Trust has always recognized the value of capital improvements to remain competitive, increase revenues, reduce operating costs and maintain and increase the value of its properties.
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