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No. of Recommendations: 8
Archstone Smith (ASN) is one of the largest and best regarded apartment REITs. It has management that is well regarded and has a strong balance sheet. It has a lot of properties in high-barrier-to-enter locations, which is very good (as opposed to areas where there is a lot of land available to build new apartments). I own some.

Currently in the business cycle, all apartment REITs are suffering. The combination of (1)the business turn-down which has caused many apartment dwellers to move home with Mom or double up with roommates, and (2) very low mortgage rates which has caused many apartment dwellers to purchase a home, has created declining occupancy in all apartment REITs. It will probably take over a year for this trend to reverse. Compounding the problem is that a lot of new apartments are being built currently because of the low interest rates, so this makes the REITs in high barrier areas a better buy right now IMO.

The major question with apartment REITs currently is whether the dividend will be reduced during this down period. There is a strong probability that the ASN dividend will not be cut, but the price may decline further if apartment REITs keep reporting lower FFO numbers.

There is a great Real Estate and REIT board here. It has an excellent FAQ section. To go there, click on my name, then click on my last 10 posts and click on one of my posts on that board. I post primarily there and on the utility board.

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