1. REITs sector Adam Watson, Brian Yang, Tianlai Zhao, Binzhao Zou

2. Agenda Overview Business Analysis Financial Analysis Economic Analysis
Valuation
Recommendation

3. Overview S&P 500 Sector Real Estate 2.8% of S&P 500
Real Estate 0% of SIM

4. Overview Real estate sector Office REITs Industrial REITs Retail REITs
Lodging REITs
Residential REITs
Timberland REITs
Health Care REITs
Self-storage REITs
Infrastructure REITs
Data Center
Diversified REITs
Specialty REITs
Real estate sector
Industry
Equity Real Estate Investment Trust T
Real Estate Management & Development B

5. Overview Top 10 Players Simon Property Group Public Storage Prologis
General Growth Properties
Welltower Inc
Ventas
AvalonBay Communities
Equity Residential
Boston Properties
Vornado Realty Trust

6. YTD/QTD
YTD
QTD

7. Business
Analysis

8. Business Analysis: Five forces
Threat of new Entrants
Low
Complex regulations and other obligations
High capital expenditure required
Bargaining power of buyers
Medium
Influenced by business environment
Concern about unknown future
Bargaining power of supplier
High
Recovery of macroeconomic
Pricing has rising for supplier
Threat of substitute product
Low switching cost for investing purpose
Online retailer influence
Threat of rivalry
Intensive competition among reits
Have to compete geographically and internationally

9. Business Cycle

10. External Factors
Interest rate: changes in interest rates can greatly influence a person's ability to purchase a residential property.
The economy: overall health of the economy can influence the value of real estate market. Usually measured by economic indicators such as GDP, employment data
Government policies/ subsidies: Tax credits, deductions and subsidies are some of the ways the government can temporarily boost demand for real estate for as long as they are in place.
Demographics: age, race, gender and median income of a particular area will influence the real estate market.

11. Financial Analysis

12. Sales and Earnings

13. FFO

14. REIT FFO by Type

15. Margins
Top table: Reits
Bottom table: S&P500
(years )

16. Economic
Analysis

17. Economic Indicators Indicator Correlation Coeff. Significance Level
S&P500
+0.702
100%
GDP
0.340
99.2%
Consumer Confidence
+0.308
Fed Funds Rate
-0.157
87.7%
US Unemployment
-0.079
71.4%
US Wage and Salary
+0.313
98.5%

18. S&P 500

19. GDP

20. Consumer Confidence

21. Fed. Funds Rate

22. US Unemployment

23. US Wage & Salary

24. Trump Favorability

25. Valuation

26. Real Estate Industry in Absolute Basis
Valuation
Real Estate Industry in Absolute Basis
Absolute Basis
High
Low
Median
Current
P/E
P/B
2.9224
0.7493
1.9726
2.3532
P/S
7.1388
1.5753
5.5562
6.2373
P/EBITDA
3.7708

27. Valuation Real Estate Industry relative to SP500
High
Low
Median
Current
P/E
4.9045
1.1869
2.4254
2.0298
P/B
1.4714
0.5978
1.1174
1.1049
P/S
4.8687
2.3121
3.7969
3.3513
P/EBITDA
2.0937
0.8023
1.5282
1.2794

28. Valuation Consensus Estimate
Absolute Basis
Current
F12 Est
Next Year Est
F2 Years Est
P/E
39.53
35.62
32.53
P/B
2.3532
2.29
3.14
3.36
P/S
6.2373
6.44
6.12
5.45
P/EBITDA
13.04
12.22
11.36

29. Valuation

30. Recommendation

31. Recommendation Recommendation
Buy
Data center
Infrastructure
Retail - High End
Hold
Industrials
Office
Avoid
Health Care
Retail - Low End

32. Questions?