1、North America Equity Research18 December 2019 2020 REIT Outlook Expect Lower Returns,but Strong Earnings Visibility Warrants a Spot in PortfoliosREITsMichael W.Mueller,CFA AC(1-212)622-J.P.Morgan Securities LLCAnthony Paolone,CFA AC(1-212)622-J.P.Morgan Securities LLCNikita Bely(1-212)622-J.P.Morgan
2、 Securities LLCHong Zhang(1-212)622-J.P.Morgan Securities LLCSarah Tan(1-212)622-J.P.Morgan Securities LLCDhiraj K Kapgate(9122)6157-J.P.Morgan India Private LimitedSee page 143 for analyst certification and important disclosures,including non-US analyst disclosures.J.P.Morgan does and seeks to do b
3、usiness with companies covered in its research reports.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment We forecast an 8-9%tota
4、l return for REIT stocks in 2020,driven by mid-to high-3%dividend income and about 5%price appreciation tied to earnings growth and no real change to valuations.To put this into perspective,the JPM view for the S&P 500 is constructive and calls for 10%EPS growth(plus 2%dividend income).If this more
5、bullish scenario unfolds,we think REIT stocks will lag the broader market.However,if S&P 500 EPS estimates have to come down again like in 2019,our stocks should do well.We think general equity investors should have some position in REITs,as earnings growth should be very visible;2019 expected FFO g
6、rowth did not budge from start to end,and we see the same picture for 2020.Fundamentals are in equilibrium,and external growth is on.We see only marginal deceleration in core growth,as CRE fundamentals are in equilibrium.We believe the group should be able to generate 2.3%same store NOI growth and 4
7、.3%FFO growth(5%w/tech REITs)in 2020.Even if the economy does a bit better or worse,this FFO growth rate should again prove to be stickier than the broader S&P 500 growth rate.With interest rates being where they are and most stocks trading at NAV premiums,REITs have the ability to drive growth thro
8、ugh accretive investment spreads.REIT valuations are up there.About 12%multiple expansion since this time last year puts valuation at or near all-time highs on FFO and AFFO multiple metrics.This,we think,could act as a cap on absolute upside from here.That said,broader market multiples have also gon
9、e up,so the spread has actually decreased between the two groups.Stocks are at 4%NAV premiums,generally in line with the groups 5%historical average and as noted allow companies to drive growth through spread investments.Dividend yields of 3.7%offer a larger-than-average spread to the 10-year Treasu
10、ry yield.Navigating the group.When it comes to stock selection within the REIT group,we have not made any notable shifts since our October update.We still prefer residential,industrial,health care,and triple net lease where we see good growth potential.At the opposite end of the spectrum,office cont
11、inues to be a thematic underweight,and 2020 is looking to be another challenging year for the regional mall sector.The return variance between the best and worst performing sectors(industrial&malls)was more than 5,800 bps in 2019;we have to imagine that the best/worst performance gap compresses in 2
12、020.On the real estate services side,we are still bullish on the CRE brokers and bearish on the residential brokers.Top stock ideas:Industrial Prologis(PLD);Residential UDR(UDR)and Invitation Homes(INVH);Triple-Net Lease EPR(EPR)and Spirit Realty(SRC);Health Care Healthpeak Properties(PEAK);Strip Ce
13、nters Federal Realty(FRT);Regional Malls Simon Property Group(SPG);Office Alexandria Real Estate(ARE)and Kilroy Realty(KRC);Diversified/Other Americold(COLD),Kennedy-Wilson(KW);Real Estate Services Jones Lang LaSalle(JLL).2North America Equity Research18 December 2019Anthony Paolone,CFA(1-212)622-Mi
14、chael W.Mueller,CFA(1-212)622- Figure 1:J.P.Morgan Equity REIT Coverage Universe as of 12/17/2019(page 1 of 2)Source:J.P.MorganStock Equity Total2020EPrem/Funds From Operations(FFO)Adjusted Funds From Operations(AFFO)JPMPricePrice Mkt.Mkt.DividendAFFOCap Rates(Disc)Per ShareY/Y GrowthP/FFOPer ShareY
15、/Y GrowthP/AFFOEV/Total ReturnCompanyTickerRating12/17/19TargetCapCapYield AmountPayoutNAVAssumedImpliedTo NAV2019E2020E2021E2019E2020E2021E2019E2020E2021E2019E2020E2021E2019E2020E2021E2019E2020E2021EEBITDAYTDQTDHealth CareHealthcare RealtyHRNeutral$32.17$32.00$4,226,115$5,580,2723.7%$1.2095%$31.225
16、.2%5.1%3.1%$1.59$1.63$1.690.8%2.8%3.3%20.3x19.7x19.1x$1.19$1.26$1.239.8%6.3%(2.3%)27.1x25.5x26.0 x23.3x17.4%(3.1%)Healthcare Trust of AmericaHTAOverweight$29.21$32.00$6,107,607$8,674,6154.3%$1.2692%$30.605.4%5.6%(4.5%)$1.64$1.70$1.761.4%3.5%3.4%17.8x17.2x16.6x$1.31$1.37$1.422.4%4.7%3.6%22.3x21.3x22.
17、5x20.6x19.3%0.5%Healthpeak Properties,Inc.PEAKOverweight$32.03$38.00$16,146,163$23,263,5924.6%$1.4898%$28.085.5%5.1%14.1%$1.76$1.81$1.87(2.9%)2.5%3.4%18.2x17.7x17.1x$1.54$1.51$1.57(2.7%)(2.1%)4.3%20.8x21.3x24.2x22.1x20.0%(9.2%)Medical Properties TrustMPWOverweight$19.89$22.00$9,144,984$15,241,2165.2
18、%$1.0483%$16.117.0%6.0%23.5%$1.32$1.57$1.65(3.2%)18.2%5.3%15.0 x12.7x12.1x$1.02$1.26$1.37(7.2%)23.2%8.8%19.5x15.8x16.1x17.4x30.5%3.0%Ventas Inc.VTRNeutral$55.83$62.00$20,976,168$33,169,7785.7%$3.1799%$53.246.2%6.1%4.9%$3.83$3.68$3.74(5.8%)(4.0%)1.7%14.6x15.2x14.9x$3.32$3.21$3.30(7.1%)(3.4%)3.0%16.8x
19、17.4x18.8x16.6x(1.3%)(23.6%)Welltower Inc.WELLNeutral$77.40$84.00$31,405,669$45,530,2844.5%$3.4892%$61.215.9%5.0%26.5%$4.16$4.22$4.353.4%1.3%3.1%18.6x18.3x17.8x$3.66$3.77$3.921.7%3.2%3.9%21.2x20.5x21.4x18.7x16.4%(13.7%)Property Type Total/Weighted Average$110,069,201$167,123,7395.2%91%5.4%18.6%(1.3%
20、)2.3%3.3%16.3x16.0 x15.5x(2.0%)3.1%3.3%18.8x18.3x17.6x17.8x15.1%(10.9%)IndustrialDuke RealtyDREOverweight$34.06$37.00$12,644,332$15,546,5942.8%$0.9466%$31.774.8%4.5%7.2%$1.44$1.52$1.618.2%5.5%5.7%23.6x22.4x21.2x$1.39$1.43$1.5110.0%3.1%5.1%24.5x23.8x24.5x23.3x35.2%0.9%First Industrial Realty TrustFRN
21、eutral$40.80$40.00$5,279,357$6,710,6242.3%$0.9265%$38.415.0%4.8%6.2%$1.74$1.81$1.898.6%4.0%4.7%23.5x22.6x21.5x$1.43$1.41$1.4811.7%(1.3%)5.1%28.5x28.9x27.0 x22.4x44.0%3.1%Liberty Property TrustLPTNeutral$58.87$53.00$8,937,055$12,021,4292.8%$1.6480%$53.055.1%4.7%11.0%$2.58$2.67$2.79(3.8%)3.3%4.6%22.8x
22、22.1x21.1x$2.03$2.05$2.205.0%0.7%7.7%29.0 x28.8x24.1x22.7x44.1%14.7%Monmouth Real Estate Investment Corporation MNRUnderweight$14.86$15.00$1,432,489$2,620,0954.6%$0.6889%$15.135.4%5.5%(1.8%)$0.87$0.90$0.93(2.0%)3.2%3.2%17.1x16.6x16.1x$0.78$0.77$0.79(4.5%)(1.2%)3.3%19.2x19.4x18.9x20.9x25.8%4.3%Prolog
23、is,Inc.PLDOverweight$87.31$97.00$57,219,656$70,901,1682.4%$2.1267%$82.364.3%4.1%6.0%$3.31$3.67$3.809.0%10.9%3.5%26.4x23.8x23.0 x$2.72$3.15$3.297.6%15.6%4.6%32.1x27.7x29.5x25.3x51.7%2.5%Rexford Industrial RealtyREXRNeutral$44.87$47.00$5,022,883$6,048,8821.6%$0.7488%$36.534.3%3.6%22.8%$1.21$1.31$1.408
24、.1%8.5%6.8%37.1x34.2x32.0 x$0.77$0.84$0.9116.0%10.1%7.5%58.6x53.2x51.8x33.4x54.4%1.9%STAG Industrial,Inc.STAGOverweight$30.35$34.00$4,160,706$5,707,7064.7%$1.4393%$29.106.3%6.1%4.3%$1.82$1.92$2.001.7%5.4%4.0%16.6x15.8x15.2x$1.44$1.53$1.594.0%6.2%4.0%21.0 x19.8x21.3x18.1x27.5%3.7%Property Type Total/
25、Weighted Average$103,603,120$130,479,9152.6%72%4.3%8.2%7.2%8.5%4.4%26.0 x23.9x22.9x8.4%10.5%5.2%32.1x29.0 x27.5x24.6x47.3%3.6%OfficeAlexandria Real EstateAREOverweight$154.90$169.00$17,346,631$23,911,4672.7%$4.1271%$141.524.9%4.3%9.5%$6.98$7.37$7.735.7%5.6%4.9%22.2x21.0 x20.0 x$5.34$5.80$6.178.3%8.7
26、%6.3%29.0 x26.7x27.4x22.6x37.2%0.6%Boston PropertiesBXPNeutral$134.47$145.00$23,206,833$34,916,6152.9%$3.9273%$136.914.6%4.6%(1.8%)$6.91$7.45$7.779.7%7.9%4.2%19.5x18.0 x17.3x$4.37$5.36$5.656.2%22.6%5.5%30.8x25.1x25.7x20.1x22.1%3.7%Brandywine Realty TrustBDNNeutral$14.90$17.00$2,653,184$4,991,7235.1%
27、$0.7672%$19.366.4%7.5%(23.0%)$1.42$1.46$1.574.9%2.6%7.3%10.5x10.2x9.5x$1.05$1.06$1.193.9%1.1%12.0%14.2x14.1x14.3x12.5x21.9%(0.4%)Corporate Office PropertiesOFCNeutral$28.31$30.00$3,208,627$5,031,6243.9%$1.1071%$32.746.5%7.2%(13.5%)$2.03$2.12$2.260.6%4.1%6.9%13.9x13.4x12.5x$1.45$1.54$1.666.5%6.5%7.6%
28、19.6x18.4x18.1x14.3x38.6%(4.9%)Cousins PropertiesCUZNeutral$39.68$40.00$5,892,758$7,900,4212.9%$1.1656%$37.436.2%6.0%6.0%$2.88$2.79$2.9714.7%(2.9%)6.2%13.8x14.2x13.4x$1.87$2.07$2.1911.8%10.5%6.0%21.2x19.2x18.3x19.0 x29.6%6.4%Douglas EmmettDEINeutral$42.33$44.00$8,529,748$12,332,1912.6%$1.1262%$43.93
29、4.7%4.8%(3.7%)$2.09$2.21$2.323.3%5.8%5.2%20.3x19.2x18.2x$1.64$1.80$1.9219.2%9.2%6.8%25.7x23.6x22.9x19.0 x26.4%(1.2%)Kilroy Realty CorpKRCOverweight$82.06$84.00$8,451,796$11,662,2232.4%$1.9472%$83.195.0%5.1%(1.4%)$3.75$4.08$4.608.0%8.6%12.9%21.9x20.1x17.8x$2.00$2.68$3.340.8%33.7%24.5%41.0 x30.6x25.2x
30、21.0 x33.0%5.4%Mack-Cali RealtyCLIUnderweight$20.42$20.00$2,052,816$4,661,9283.9%$0.8067%$28.286.0%8.3%(27.8%)$1.62$1.66$1.81(11.8%)2.5%9.4%12.6x12.3x11.3x$0.99$1.19$1.284.3%21.0%7.6%20.7x17.1x15.6x14.9x8.2%(4.8%)Piedmont Office Realty TrustPDMNeutral$21.43$21.00$2,695,530$4,357,5063.9%$0.8479%$25.2
31、46.3%7.0%(15.1%)$1.77$1.81$1.892.2%1.8%4.9%12.1x11.9x11.3x$1.11$1.06$1.4112.8%(4.3%)32.3%19.3x20.2x14.9x14.3x31.0%3.6%PS Business Parks,Inc.PSBNeutral$163.30$178.00$5,672,244$6,631,9942.6%$4.2069%$133.325.5%4.6%22.5%$6.92$7.13$7.437.0%3.0%4.2%23.6x22.9x22.0 x$5.82$6.10$6.5011.2%4.9%6.4%28.1x26.8x27.
32、4x25.1x27.9%(9.7%)SL Green RealtySLGUnderweight$89.02$88.00$7,715,185$18,171,5794.0%$3.5482%$116.904.9%5.8%(23.8%)$6.92$6.84$7.494.6%(1.1%)9.5%12.9x13.0 x11.9x$3.92$4.31$4.9122.3%10.0%13.9%22.7x20.7x17.9x16.4x16.0%8.9%Vornado Realty TrustVNOUnderweight$65.00$67.00$13,325,715$24,749,6814.1%$2.64117%$
33、88.494.6%5.7%(26.5%)$3.42$3.55$3.88(7.1%)3.8%9.2%19.0 x18.3x16.8x$2.49$2.26$2.625.6%(9.2%)16.0%26.1x28.8x25.6x24.4x9.1%3.1%Washington REITWREUnderweight$29.32$25.00$2,348,004$4,069,4874.1%$1.2088%$29.256.0%6.0%0.2%$1.71$1.62$1.75(8.1%)(5.4%)8.2%17.2x18.1x16.8x$1.52$1.37$1.56(1.0%)(10.0%)14.2%19.3x21
34、.4x16.0 x21.1x31.7%7.2%Property Type Total/Weighted Average$137,489,247$214,236,9563.2%75%5.4%(8.5%)4.4%4.0%5.8%18.6x17.9x17.0 x6.1%10.6%9.2%27.7x23.1x22.6x19.4x24.0%2.4%Regional MallCBL&Associates PropertiesCBLUnderweight$1.05NR$238,336$5,551,0200.0%$0.000%$2.529.3%9.9%(58.3%)$1.33$1.27$1.26(22.8%)
35、(4.9%)(0.8%)0.8x0.8x0.8x$0.32$0.33$0.39(7.7%)2.5%17.1%3.2x3.2xNA14.0 x(42.7%)(18.6%)Pennsylvania REITPEIUnderweight$5.24$5.50$417,235$2,850,37416.0%$0.84128%$8.748.0%8.9%(40.0%)$1.11$1.21$1.26(28.1%)9.6%3.7%4.7x4.3x4.2x$0.71$0.66$0.74(8.2%)(7.4%)12.6%7.4x8.0 x7.5x13.7x1.6%(5.1%)Simon Property GroupS
36、PGNeutral$144.66$162.00$51,155,248$84,837,0585.8%$8.4079%$178.575.3%6.1%(19.0%)$12.37$12.56$13.062.0%1.5%4.0%11.7x11.5x11.1x$10.84$10.70$11.203.3%(1.3%)4.7%13.3x13.5x14.5x16.0 x(9.4%)(5.8%)Tanger Factory OutletSKTUnderweight$14.89$17.00$1,451,388$3,207,2759.5%$1.4283%$18.098.7%9.5%(17.7%)$2.29$2.17$
37、2.24(7.6%)(5.1%)3.4%6.5x6.9x6.6x$1.72$1.71$1.80(11.5%)(0.6%)5.8%8.7x8.7x9.4x11.7x(20.5%)(1.7%)Taubman CentersTCOUnderweight$29.59$34.00$2,593,383$7,841,1839.1%$2.70100%$76.484.7%7.0%(61.3%)$3.69$3.72$3.85(3.5%)0.8%3.6%8.0 x8.0 x7.7x$1.70$2.71$2.8245.2%58.9%4.3%17.4x10.9x12.0 x14.3x(30.5%)(25.9%)The
38、Macerich CompanyMACNeutral$25.95$34.00$3,941,205$11,917,64511.6%$3.00101%$50.825.8%7.7%(48.9%)$3.54$3.55$3.66(8.2%)0.4%3.2%7.3x7.3x7.1x$2.90$2.96$3.07(6.8%)2.0%3.7%8.9x8.8x11.1x13.3x(34.6%)(15.7%)Property Type Total/Weighted Average$59,796,794$116,204,5546.5%81%6.7%(23.1%)0.5%1.3%3.9%11.0 x10.9x10.5
39、x4.0%1.5%4.7%13.0 x12.9x12.3x15.2x(12.3%)(7.3%)20193North America Equity Research18 December 2019Anthony Paolone,CFA(1-212)622-Michael W.Mueller,CFA(1-212)622- Figure 2:J.P.Morgan Equity REIT Coverage Universe as of 12/17/2019(page 2 of 2)Source:J.P.Morgan2019E,2020E,2021E FFO Growth ex Technology R
40、EITs is 3.0%,4.1%,4.7%Stock Equity Total2020EPrem/Funds From Operations(FFO)Adjusted Funds From Operations(AFFO)JPMPricePrice Mkt.Mkt.DividendAFFOCap Rates(Disc)Per ShareY/Y GrowthP/FFOPer ShareY/Y GrowthP/AFFOEV/Total ReturnCompanyTickerRating12/17/19TargetCapCapYieldAmountPayoutNAVAssumedImpliedTo
41、 NAV2019E2020E2021E2019E2020E2021E2019E2020E2021E2019E2020E2021E2019E2020E2021E2019E2020E2021EEBITDAYTDQTDResidentialAmerican Campus CommACCNeutral$45.51$53.00$6,316,766$9,680,2354.1%$1.8881%$51.374.8%5.2%(11.4%)$2.43$2.52$2.675.7%3.5%6.0%18.7x18.1x17.0 x$2.24$2.31$2.467.1%3.3%6.2%20.3x19.7x21.6x19.
42、8x14.4%(4.4%)AIMCOAIVNeutral$50.46$55.00$7,912,330$12,268,2183.1%$1.5667%$47.775.1%4.9%5.6%$2.49$2.63$2.801.0%5.3%6.7%20.2x19.2x18.0 x$2.19$2.34$2.511.5%6.5%7.2%23.0 x21.6x21.9x22.0 x18.9%(2.5%)American Homes 4 RentAMHOverweight$25.34$28.00$8,938,382$12,659,2470.8%$0.2019%$24.775.1%5.0%2.3%$1.12$1.2
43、2$1.345.0%8.9%10.4%22.7x20.8x18.9x$0.96$1.03$1.1620.2%7.2%13.0%26.5x24.7x24.1x20.8x28.5%(2.1%)AvalonBay CommunitiesAVBOverweight$206.64$230.00$28,862,504$36,223,7832.9%$6.0865%$206.704.4%4.4%(0.0%)$9.32$9.78$10.393.6%4.9%6.2%22.2x21.1x19.9x$8.75$9.33$9.932.9%6.6%6.4%23.6x22.2x23.2x22.5x21.4%(4.0%)Ca
44、mden Property TrustCPTOverweight$104.53$115.00$10,540,701$13,018,0883.1%$3.2067%$102.335.1%5.0%2.1%$5.02$5.51$5.885.1%9.8%6.7%20.8x19.0 x17.8x$4.31$4.79$5.157.0%11.1%7.4%24.2x21.8x22.3x21.4x22.4%(5.1%)Equity ResidentialEQRNeutral$80.11$89.00$30,848,520$39,877,7362.8%$2.2772%$80.404.4%4.4%(0.4%)$3.48
45、$3.67$3.906.8%5.6%6.2%23.0 x21.8x20.5x$3.01$3.13$3.359.0%3.9%7.1%26.6x25.6x26.5x21.2x24.0%(7.1%)Essex Property TrustESSNeutral$296.19$328.00$20,277,464$26,325,6052.6%$7.8060%$274.874.3%4.0%7.8%$13.32$14.04$14.835.9%5.4%5.7%22.2x21.1x20.0 x$12.08$13.01$13.804.1%7.7%6.1%24.5x22.8x23.8x22.3x23.2%(9.3%)
46、Front Yard Residential CorpRESINeutral$12.21$13.00$657,881$2,275,3384.9%$0.60-457%$15.135.5%5.9%(19.3%)($0.57)$0.28$0.45(18.0%)(149.9%)59.1%-21.6x43.2x27.2x($1.00)($0.13)$0.0654.8%(86.9%)(142.7%)-12.2x-93.0 x232.0 x26.8x45.8%5.6%Invitation Homes INVHOverweight$28.69$31.00$15,634,578$24,290,4711.8%$0
47、.5248%$28.694.8%4.7%0.0%$1.26$1.35$1.437.1%6.9%5.8%22.8x21.3x20.1x$1.03$1.08$1.158.7%5.4%6.2%27.9x26.5x26.9x24.2x45.8%(2.7%)UDR,Inc.UDROverweight$45.71$50.00$14,570,130$19,405,9683.0%$1.3768%$42.864.6%4.3%6.7%$2.08$2.20$2.316.4%5.8%4.8%22.0 x20.8x19.8x$1.92$2.01$2.127.0%4.7%5.2%23.8x22.7x23.6x24.5x1
48、8.9%(5.0%)Property Type Total/Weighted Average$168,863,787$235,276,1902.8%63%4.6%1.8%5.6%5.7%6.3%20.4x20.9x19.6x5.2%6.6%6.6%25.3x23.3x23.1x21.9x25.8%(4.6%)Self StoragePublic Storage,Inc.PSANeutral$205.24$220.00$35,846,290$41,936,3923.9%$8.0082%$217.025.3%5.6%(5.4%)$10.71$10.94$11.211.5%2.1%2.5%19.2x
49、18.8x18.3x$9.51$9.74$9.97(2.6%)2.4%2.4%21.6x21.1x22.1x18.1x5.0%(15.5%)Property Type Total/Weighted Average$60,545,691$75,533,6003.8%80%5.6%(1.0%)2.4%2.9%3.1%19.5x18.9x18.3x0.2%3.1%2.7%21.4x20.7x20.2x19.0 x9.1%(13.1%)Strip CenterAcadia RealtyAKRNeutral$25.70$29.00$2,357,076$3,342,0604.5%$1.16100%$27.
50、445.3%5.6%(6.3%)$1.41$1.41$1.492.5%(0.2%)5.6%18.2x18.2x17.3x$1.11$1.16$1.229.2%4.4%5.2%23.1x22.1x23.7x22.2x11.5%(10.1%)Brixmor Property GroupBRXOverweight$20.95$24.00$6,239,874$11,115,3275.4%$1.1476%$22.027.1%7.4%(4.9%)$1.93$1.96$2.04(3.4%)1.3%4.0%10.8x10.7x10.3x$1.40$1.50$1.58(4.7%)7.6%5.1%15.0 x13