Barron's interviewed Greenstreet Director of Research, Mike Kirby. STRONGLY RECOMMENDED reading:From Barrons:Kirby: Let me start with the least-favorable comparison—stocks. REITs trade for about 25 times 2013 earnings, and when I speak of earnings, I am using AFFO, or adjusted funds from operations, which is the industry's primary earnings benchmark. The S&P 500 trades at 15 times forward earnings. That suggests that REITs are awfully expensive. But I'll throw you a couple of mitigating points. One is that REIT earnings growth is going to be very impressive. We project 9% growth in AFFO over the course of each of the next two years, and there is no reason that it slows down much after that because we are in the sweet spot in the real-estate cycle. Over the past eight years, REIT multiples have been much higher than the S&P 500. We have to ask ourselves if this is a new normal situation.What else do you look at?Given the growth outlook, REITs look pretty attractive in a low-yield world. When we add it all up, we conclude that REITs are somewhere within a fair-value range, maybe at the pricey side of that fair-value range, but certainly not dramatically overpriced.Which sectors look best?The mall business is not just a good business by real-estate standards; I'd argue that it is just a great business. It has performed wonderfully over the past 20 years, especially at the high end—the types of malls that Simon Property Group [SPG], Taubman, General Growth Properties [GGP], and Macerich [MAC] own. These malls have done exceedingly well in good times, and their cash-flow growth has held up very well, surprisingly well, in bad times. Prospects going forward are very good.Link to full article:http://online.barrons.com/article/SB500014240527487042532045...If this does not work, you can Google the title:"Why REITs Will Stay on a Roll"
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