Multifamily Properties Look Good to Bear Stearns This Year

NEW YORK CITY-Believing that supply and demand should favor multifamily properties this year, Bear Stearns analysts Ross Smotrich and Jeffrey Langbaum are recommending that REIT investors favor this sector, which performs relatively well in a slowing economy. They note that while employment growth may slow, job creation remains net positive, real wages are still going up and people need a place to live. The analysts have upgraded their ratings for three multifamily stocks.

Apartment Investment and Management Co. has been moved up from a Buy to Attractive due to expectations that it will produce double-digit FFO over the next two years. Currently trading at $47, the Bear Stearns target price is now $53, which implies a total return just below 20%, including a current 6% dividend yield.