That said, Hastings believes the board is aware of the market’s perception of BRE Properties Inc (NYSE:BRE) and is willing to take action if needed. He sees this taking the shape of faster asset sales or even the sale of the entire company. The relatively small size of the portfolio (74 buildings) and tight regional focus would make it a nice bolt-on acquisition for a larger company looking for West Coast exposure. Such a sale would also lead to a quick boost in the share price, since BRE Properties Inc (NYSE:BRE) would likely sell at a premium to what the shares trade for today.
A Growth Market
Texas is another market that Hastings is fond of, with Camden Property Trust (NYSE:CPT) providing fairly direct access. The REIT owns over 190 apartments, with 55 located in Texas. That’s the largest single state exposure in the portfolio.
Although the REIT could be described as boring, Hastings believes it has one of the top five management teams in the REIT industry. It has a history of successfully allocating capital which, combined with its solid but boring business, allows it access to relatively low cost capital to fund future growth. Sometimes boring can be a good thing.
The REIT yields around 3.6% and has material exposure to one of the best performing states in the country. Although the dividend was cut during the recession, the disbursement is back in growth mode along with the rent roll. Investors looking to tap into Texas should consider this relatively high yielding apartment REIT.
Cheap Apartments
BRE Properties Inc (NYSE:BRE) Properties and AvalonBay Communities Inc (NYSE:AVB) both provide exposure to space constrained West Coast markets. BRE should be of interest to investors seeking turnaround opportunities, while AvalonBay is a high-end industry leader. Camden Property Trust (NYSE:CPT)’s future, meanwhile, is closely tied to strongly growing Texas and it offers the highest yield of the trio.
Delaware Global Real Estate Opportunities Fund offers one-stop REIT exposure and a management team that digs up these kinds of ideas across the globe. The fund ranks in the top quartile of Lipper’s Global Real Estate peer group over the trailing three- and five-year periods through May, so it’s a solid option for long-term investors looking to outsource their REIT investing.
Reuben Brewer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Reuben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Three Apartment Picks From Delaware Funds originally appeared on Fool.com is written by Reuben Brewer.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
