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2015 All-America Research Team: REITs, No. 3: Jeffrey Spector & team
At No. 3 for a third consecutive year is Jeffrey Spector’s ten-person crew at Bank of America Merrill Lynch.
Total appearances: 21
Team debut: 1974
At No. 3 for a third consecutive year isJeffrey Spector’s ten-person crew at Bank of America Merrill Lynch. The researchers possess “in-depth industry knowledge achieved through both independent analysis and communication with a wide range of management teams,” one investment manager observes. They are advising clients that U.S. real estate investment trusts’ “operating fundamentals should continue to improve along with the economy as tenant demand increases and new supply remains mostly limited,” Spector says. Strong flows into U.S. prime assets support valuations, he notes, and “as a result, we see capitalization rates remaining fairly firm into 2016.” The key issues for companies in this sector, they contend, include the risk that an improving economy will lead to higher interest rates that in turn will pressure funding costs and that easing lending standards will fuel construction and flows into the direct real estate market. Spector, 43, and his colleagues counsel buying companies with “the most leverage to an improving economy,” namely REITs that have development pipelines that “can deliver external growth and/or the ability to push rents quickly once the economy starts picking up steam,” he explains. Examples include Essex Property Trust, a residential developer based in Palo Alto, California; and Salt Lake City’s Extra Space Storage, an industrial player whose focus is self-storage facilities.