Parkway Properties Inc. (Nasdaq: PKY – $15.79; Sector Perform)

• Near-term acquisitions will likely be adjacent to existing assets that create synergies.
• The JV partner at Courvoisier Centre appears interested in growing its relationship with PKY.
• The company has made solid progress disposing of non-core assets, with only five remaining.
• There is solid interest in the BMC space, but cash rents will likely not commence until 2017.
• PKY is tracking solid demand for the US Airways building, with tenants needing space now.

Government Properties Income Trust (NYSE: GOV – $15.64; Underperform)

• Management plans to be patient over the next six months given the recent market volatility.
• GOV reiterated there is no need to reduce the dividend, and indicated it is currently covered.
• Private valuations are steep, but the company could complete higher-yielding acquisitions.
• Management is tracking 300,00 SF of new leases; spreads should remain largely flat.
• Despite higher leverage metrics, GOV remains comfortable with its current position.

Corporate Office Properties Trust (NYSE: OFC – $21.55; Sector Perform)

• The DoD budget should increase by $25B in FY16 and $15B in FY17, stabilizing near 2011 levels.
• OFC expects activity will increase in 2H16; the government may award longer-term contracts.
• The company appears more focused on new developments; acquisitions are unlikely.
• Management will remain active recycling non-core assets in order to fund investment activity.
• The niche portfolio currently generates 75% of ABR and it should increase to ~85% by YE17.

Retail

Acadia Realty Trust (NYSE: AKR – $32.31; Outperform)

• Core street retail productivity remains productive despite slowdown in Gateway markets.
• Core acquisition activity should remain strong as financing restricts higher-leverage bidders.
• However, it remains a seller's market for both core and fund portfolios.
• The company has adequate access to both debt and equity capital at current share price.
• Fund IV should be completed by August 2016, giving way to the inception of Fund V.

Brixmor Property Group Inc. (NYSE: BRX – $24.82; Outperform)

• Personnel additions to the investment team indicate the potential for activity in the long term.
• Raising The Bar initiative should yield significant results through the end of the decade.
• In addition, management continues to review larger scale redevelopment opportunities.
• Look for $1.2 billion of bond offerings in 2016 with staggered terms.
• Management hopes to achieve 6.0x debt/EBITDA over the medium term.

Macerich Company (Nasdaq: MAC – $76.18; Sector Perform)

• Long-term same-store NOI growth of 4–5% is reasonable in management's view.
• Bankruptcies in 2016 are likely to be reorganization-oriented as opposed to liquidation.
• An incremental 150 bps of margin improvement is expected to come from revenue growth.
• For secured debt financing, banks, LifeCo's, and CMBS are available to Macerich.
• Macerich completed an accelerated stock repurchase (ASR) of 4.1 million shares.

Regency Centers Corporation (NYSE: REG – $66.04; Outperform)

• Recent management changes put additional focus on ground-up development.
• Look for the development pipeline to reach $300 million in starts annually.
• Specialty/organic grocers are key drivers for developments.
• Development spending can be funded without accessing the equity market.
• Debt spreads have risen by 20 bps from the lows in 3Q15.

Rouse Properties, Inc. (NYSE: RSE – $15.76; Outperform)

• At recent Carlsbad acquisition, RSE could recapture space by consolidating the two Macy's.
• Management suggested annual same store growth of 3–4% is achievable.
• Acquisition pace could slow as capital is allocated toward new redevelopment projects.
• Management expects to be able to fund its current pipeline without additional equity.
• October tenant sales at the company's portfolio were modest but not disappointing.

Weingarten Realty Investors (Nasdaq: WRI – $33.18; Outperform)

• Over the last year, more positive than negative news has come out of retailers.
• Houston is likely to see continued slowing in the job market, but little impact on WRI.
• Development remains slow, with more activity in the city core as opposed to suburbs.
• Debt spreads have tightened but remain 10–15 bps higher than 2Q levels.
• National grocers are selectively adding stores while consolidation is likely for niche players.

Multifamily

Avalonbay Communities Inc. (NYSE: AVB – $175.16; Outperform)

• AVB is starting to see condo conversions in NY, BOS, SEA, SF, and DC.
• AVB favors the suburban markets over the next few years due to the lower supply outlook.
• Increasing household formation should help to absorb the new supply.
• Multifamily will likely account for 35–40% of total housing supply.
• AVB is building larger units in some markets due to the scarcity of large units.

Apartment Investment and Management Company (NYSE: AIV – $36.72; Sector Perform)

• AIV remains committed to a diversified portfolio with long-term cash flow predictability.
• Expenses could be elevated next year as AIV implements a site-level efficiency program.
• Management believes price dislocation is due to CFO departure and large acquisition in No. Cal.
• AIV will likely build its Seattle allocation when the market is out of the favor.
• AIV has plenty of backlog to support annual redevelopment spending of $200m.

Student Housing

Education Realty Trust (NYSE: EDR – $35.79; Outperform)

• EDR expects no demand impact from universities that cater to petroleum degrees.
• Leasing continues to be healthy, helped by online new/renewal processes.
• EDR expects to have $100m of additional development announcements for 2017 delivery.
• ONE Plan interest is higher than ever, with 16 universities seeking RFPs for PIPE investment.
• EDR is marketing older quality product given attractive relative valuations.

Healthcare

HCP Inc. (NYSE: HCP – $33.41; Underperform)

• SNFs are the low-cost provider and, despite concerns, should benefit from healthcare reform.
• The expected HCRMC coverage fell as SNFs had a soft 3Q; trends should improve in 4Q/1Q.
• HCP will be focused on opportunistic acquisitions in the near term as valuations stabilize.
• HCP is encouraged by the UK market with a focus on private-pay care home developments.
• Management is comfortable with SH supply, as rental rates are typically 10–20% higher.

Physicians Realty Trust (NYSE: DOC – $15.47; Outperform)

• The pipeline is solid and may be stronger than it has ever been in the company's history.
• Private valuations have not moved recently and will likely stay largely flat in the near term.
• PE funds remain active and continue to use of significant leverage to acquire assets.
• Organic growth should trend near the top end of the 2.0–3.0% range due to the 603 assets.
• Management will look to issue another larger unsecured notes offering in 2016.

Ventas, Inc. (NYSE: VTR – $50.06; Outperform)

• Senior housing supply must grow 3.0% annually to keep pace with demand and obsolescence.
• VTR can deploy $1.3 billion per year on a leverage-neutral basis including $500 million of sales.
• Redevelopment opportunities are attractive; VTR expects it could start $200 million per year.
• Management appears resistant to push leverage much higher above long-term target range.
• The Ardent platform will be able to implement significant synergies at not-for-profit hospitals.

Lodging

Hospitality Properties Trust (NYSE: HPT – $26.55; Underperform)

• Sonesta should post good relative growth in '16 due to less renovation activity.
• HPT is focused on building deposits over the next few years with only Wyndham a concern.
• There are pockets of new supply, but overall business remains good for the hotel portfolio.
• HPT will likely look to the debt market to reduce the line of credit balance.
• Cash flow from TA is expected to improve as newly acquired centers stabilize.

Pebblebrook Hotel Trust (NYSE: PEB – $32.91; Outperform)

• PEB expects demand to outpace supply through 2017, supporting continued RevPAR growth.
• Less ability to shift the guest mix toward higher-rated customers has hurt RevPAR growth.
• Overbooking and longer lead times should help to offset last-minute cancellations.
• PEB expects to use disposition proceeds to retire preferred equity in 2016.
• Citywides in SF should be strongest in 1Q16, with citywides flat ex-Super Bowl.

Summit Hotel Properties (NYSE: INN – $12.81; Outperform)

• Business remains good headed into the seasonally softer November/December.
• Only 10% of INN's markets have supply, with only half of the supply expected to be disruptive.
• Houston will likely post flat RevPAR growth next year.
• ARC Hospitality's likelihood to close both tranches of the acquisitions from INN increased.
• INN has $20 million left of the deposit should ARC Hospitality not be able to close.

Industrial

Duke Realty Corp. (NYSE: DRE – $19.49; Outperform)

• DRE reiterated its strategy and plans to stay the course despite recent leadership changes.
• Developments should create value, but management will be cautious with speculative starts.
• Private market valuations are too steep, making it difficult to complete acquisitions.
• DRE will likely sell ~$800 million by YE16 to take advantage of current valuations. Management will use the sale proceeds to de-lever, preparing DRE for a potential downturn