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Real Estate Stock Analysis
Adam Watson, Brian Yang, Tianlai Zhao, Binzhao Zou
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Real Estate (REIT) Overview of Real Estate
Currently SIM owns 0% 2.93% of S&P 500
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Real Estate (REIT) Current Real Estate Market
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Real Estate (REIT) Company REIT Industry Recommendation Basis Points
(293 Available) Current Price Target Price Upside/ Downside Duke Realty Industrial Watch $27.43 $25.09 -8.50% Simon Property Group Retail Buy 100 $171.48 $208.05 +21.32% Equity Residential Residential 130 $63.50 $75.00 +18.11% Boston Properties Office $135.65 $144.51 +6.50% Digital Realty Trust Data Center 63 $109.30 $134.48 +23.00%
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Duke Realty (NYSE: DRE)
Business 455 industrial properties 86 healthcare properties Drivers President Trump’s pro business policies - (Warehouse Portfolio) Growing trend of e-commerce businesses Risks Uncertainty of healthcare portfolio Increase in interest rates by Fed
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Financial Analysis 2013 2014 2015 2016 2017 2018 Sales $1,081,790
$1,164,704 $949,432 $902,244 $929,594 $1,018,779 FFO per share $1.07 $.86 $1.21 $1.24 $1.35 Consensus estimates $1.25 $1.33 EPS $.47 $.60 $1.77 $.88 $.90 $.98 $.35 $.36 ROE 6.75 7.55 20.37 9.39
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DCF Valuation
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DRE Absolute Basis
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DRE vs. S5REAL
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Equity Residential Corporation (NYSE: EQR)
52wk Range: $58.28 – $72.36 Beta: Market Capitalization: $23.88B Price to Earnings Current Price Revenue B Revenue Growth % Target Price $75
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EQR Valuation vs. S&P 500 and S5REAL
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Business Drivers Good macroeconomic environment: Low unemployment rate and high GDP Growth rate Strong business strategy: Big coastal markets Sustainability: Decrease cost and increase profitability
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Sensitivity Analysis
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Equity Residential Corporation - Recommendation
Current Price: $63.50 Target Price: $75.00 Upside: % Recommended Weight:BUY 130bps
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Simon Property Group (NYSE: SPG)
Current Price: $171.48 Target Price: $208.05 Beta: Market Cap: $61.58B Share Outstanding: M P/E ratio: Dividend Yield: % 52 wk Range: $ $229.10 EPS: $5.87 Revenue: $5.44B Company Overview Simon Properties Group is American commercial real estate company in the United State and the largest real estate investment trust that develops and leases retail real estate, specifically regional malls, shopping centers and strip malls, with a portfolio of over 200 retail properties totaling approximately 185 million sq. ft. of leasable space across more than 35 states and Puerto Rico. The REIT also has stakes in outlet centers in Canada, Mexico, Europe and Asia. CEO and Chairman David E. Simon is the son of Melvin Simon, who founded the firm with his brother, Herbert.
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Cost Driven Factor: aggressive cost control, energy efficiency plan
Business Analysis Macro-economic Environment: slow recovering economic, more disposal income, boost on consumer confidence Strategic Position: focus on high-end market, improvement in top management team. Revenue Driven Factor: ability to locate attractive acquisition opportunity, focus on quality of customer experience Cost Driven Factor: aggressive cost control, energy efficiency plan
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One Year Stock Performance -17.84%
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Absolute Basis High Low Median Current P/E 78 15 39 42.8 P/B 2.9 0.75 2 2.4 P/S 7.1 1.9 5.4 6.2 P/EBITDA 16.5 3.81 12.1 14.4 Relative Basis High Low Median Current P/E 3.19 1.24 2.30 2.02 P/B 1.03 2.04 1.22 1.23 3.68 2.47 4.03 3.33 P/EBITDA 1.46 0.87 1.66 1.27
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Sensitivity Analysis
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Simon Property Group - Recommendation
Current Price: $171.48 Target Price: $208.05 Upside: 21.32% Current Weight: 0 bps Recommended Weight: 100 bps
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Boston Properties, Inc. (NYSE: BXP)
Company Overview Self-administered and Self-managed REIT Largest owner, manager, and developer of first-class office properties in the US. Markets Boston Los Angeles New York San Francisco Washington DC Significant Tenants US Government (3.82%) Citi Bank Bank of America Google Microsoft Financial Metrics Today’s Price: $135.65 Target Price: $144.51 Avg. Rating: (2 = Buy, 3 = Hold) 52 Week Range: $ $144.02 Beta: P/E Ratio: P/B Ratio: Profit Margin: % ROE: % Payout Ratio: %
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One Year Stock Performance +6.13%
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DCF Valuation
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Digital Realty Trust (NYSE: DLR)
Company Overview Digital Realty Trust engages in the ownership, acquisition, development, redevelopment, and management of technology-related real estate. It focuses on strategically located properties containing applications and operations critical to the day-to-day operations of technology industry tenants and corporate enterprise datacenter users. Product Offerings Data Centers Interconnection Colocation Cloud Computing Significant Tenants AT&T IBM Financial Metrics Today’s Price: $109.30 Target Price: $134.48 Avg. Rating: (2 = Buy, 3 = Hold) 52 Week Range: $ $113.21 Beta: P/E Ratio: P/B Ratio: Profit Margin: % ROE: % Payout Ratio: %
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One Year Stock Performance +20.23%
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Digital Realty Service Exchange
Product Line Differentiation Utilizing existing partnerships and business Customer Oriented Design Data Security Proprietary High Barrier to Entry
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Global Location and Expansion
Availability 4 Continents US Europe South Asia Australia 11 Countries 150+ Locations And Growing!
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DCF Valuation
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Digital Realty Trust - Recommendation
Current Price: $109.30 Target Price: $134.48 Upside: % Recommended Weight:BUY 63 bps
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REIT Recommendation
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REIT Recommendation Company REIT Industry Recommendation Basis Points
(293 Available) Current Price Target Price Upside/ Downside Duke Realty Industrial Watch $27.43 $25.09 -4.20% Simon Property Group Retail Buy 100 $171.48 $208.05 +21.32% Equity Residential Residential 130 $63.50 $75.00 +18.11% Boston Properties Office $135.65 $144.51 +6.50% Digital Realty Trust Data Center 63 $109.30 $134.48 +23.00%
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