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Multifamily Could Shine in Tough Year

MINNEAPOLIS-Andrew Rosivach, U.S. Bancorp Piper Jaffray REIT analyst, adds coverage of eight multifamily rental investment trusts. He bestows "outperform" ratings on five of them, "market perform" on the other three.

By Jim McCartney | Updated on May 16, 2002

MINNEAPOLIS-The real estate industry may be in for a tougher year than originally anticipated, says Andrew Rosivach, a senior financial analyst for Minneapolis-based U.S. Bancorp Piper Jaffray, who recently started coverage of eight multifamily rental investment trusts. Because of difficult supply and demand fundamentals in the first half of 2002 and a challenging same-store growth environment in the apartment real estate investmenttrust sector, Rosivach believes the market will experience even greater earnings downside in 2002 than anticipated.

However, Rosivach says apartment REITs, with their short lease terms, will react rapidly to improving market fundamentals, leading to above-trend earnings growth in 2003.

“We believe operating fundamentals will improve for the apartment sector in 2003 as the US economy starts producing more jobs,” Rosivach says. “As a result, we believe the apartment REIT sector can attain 2003 funds from operations growth of between 8%and 11% in 2003, nearly twice Wall Street consensus.”

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