Deutsche Bank said investors must hold their playbooks 2011 when it draw up a game plan for real estate and REITs in 2012.
External macro, disappearing shock DB expects us commercial real estate fundamentals to strengthen in 2012, which combined with a multiple s and average 3.5% dividend yield should encourage regrowth plus results driven a total of 8-12% in 2012 to REIT stock, which is the same DB range for 2011. At the end of low, expect investors to receive DB dividend plus 3.7% growth in revenue, and at the end of the high DB see investors who benefitted from better-than-anticipated capital deployment by REITs and/or a stronger recovery in the base.
DB notes that the average assessment of REIT stay on top of half of the range of history in most metrics, but “we still think that this assessment is justified because we believe REIT earnings in the early stages of recovery.” More from the DB:
We think the good economy REITs “messy-together”, with a modest GDP growth combined with low historical rates of new supply coming in line, to encourage improvements in the most basic type of property continued. However, the economy would probably not growing fast enough to meaningful higher price pressure will also increase to convince enough ways to drive investors from the REIT stock and become more offensive-oriented market sector (especially in finance). We thought this would be aware of the risks of rotation at some point but, in our view, we are not there yet.