10/11/2013 | By Sarah Borchersen-Keto
For the fourth year in a row, Steve Sakwa and his team at ISI Group top Institutional Investor’s 2013 All-America Research Team in the REIT sector, followed by Citigroup Inc.’s Michael Bilerman in second place and Jeffrey Spector at Bank of America Merrill Lynch in the number three slot.
ISI senior managing director Sakwa has been analyzing REITs since 1993, and his team currently tracks 35 companies. Sakwa told Institutional Investor that while REIT fundamentals still show improvement, with healthy pricing power in several areas, the increase in long-term interest rates is an issue for the sector.
Bilerman, head of the Real Estate and Lodging Research Team at Citigroup, also took the number two position for the fourth consecutive year. His team covers 76 companies.
Bank of America Merrill Lynch’s Spector, whose team gained a top three ranking for the first time, described the news as “great recognition for our team approach and the depth of experience we bring to our research.” Spector’s eight-member team covers 80 REITs spanning most of the core sectors, with the exception of lodging and mortgage. In terms of total experience, Spector says he and his colleagues are “one of the deepest teams on the Street.”
The Bank of America Merrill Lynch team headed into 2013 forecasting that REITs would underperform if there was macroeconomic clarity, and it still maintains that view. “That said, given the noise coming out of Washington, D.C., and concerns over the debt ceiling, we do feel that REITs can outperform from here to year end.” But if things are resolved with the budget and the debt ceiling, then Spector expects REITs to continue to underperform the broader market.
The All-America Research Team is compiled by sending questionnaires to the directors of research and the chief investment officers of major money management firms. Institutional investors on client lists submitted by Wall Street research directors were also contacted, while questionnaires were sent to analysts and portfolio managers at many top institutions, according to Institutional Investor.