J.P. 摩根-美股-房地产行业-全美房地产投资信托协会（NAREIT）的REIT世界会议-2019.11.15-65页.pdf

North America Equity Research15 November 2019 REITsHeres what went down at NAREITs REITworldREITsAnthony Paolone,CFA AC(1-212)622-Bloomberg JPMA PAOLONE J.P.Morgan Securities LLCMichael W.Mueller,CFA AC(1-212)622-Bloomberg JPMA MUELLER J.P.Morgan Securities LLCNikita Bely(1-212)622-J.P.Morgan 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 62 for analyst certification and important disclosures,including non-US analyst disclosures.J.P.Morgan does and seeks to do business 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 decision.We attended NAREITs REITworld conference in Los Angeles this week and met with 51 management teams and participated in six property tours/events.The mood in most meetings and in the hallways was upbeat.Underlying fundamental trends for the large majority of companies in the space are pretty solid given how long the economic expansion has been going and job growth that has been consistent,even if notched down a little this year.Interest rates are low and stocks have posted total returns of 25%YTD.This makes for a good overall operating environment for the space,and most companies are now in a position to use their stock currencies to fund accretive investment activity.In our view,we continue to see the set-up for REITs as being good because of the visibility we see for 4%earnings growth in 2020 with above-average dividend yields in a low-rate environment.We think investors should have exposure to the space.This picture does remain dependent,however,on how the broader market plays out.For instance,we have seen a significant reversal in relative outperformance for this group(and within the group)in the last 1-2 months as tariffs/trade became less of a perceived risk and the prospects of renewed global growth emerged.But recall that for the first nine months of 2019,lower interest rates and downward revisions to S&P 500 earnings expectations helped fuel 600+bps of REIT outperformance.This relationship is unlikely to change.We walk through high-level takeaways for the various property types below,followed by recaps from our management meetings and some of the tours.2North America Equity Research15 November 2019Anthony Paolone,CFA(1-212)622- Property Type TakeawaysResidential:2020 may be about ops and demand holding up as supply wont help apartment REITs.Operations and bringing technology and new processes into the mix dominated our NAREIT conversations in the apartment REIT space.Whether it was revenue initiatives(parking,smart home tech)or cost saving initiatives(self-touring,headcount reductions,better data usage),the push for better margins was consistent.It seemed like the number being circled by apartment REIT management teams is something in the order of 100-200 bps of margin improvement over the next few years.Given existing margins of about 70%,if this level of improvement is achieved over three years it would add about 50 bps of annual NOI growth not bad,in our view,though it may be tough to tease out of the numbers.These operating initiatives may be particularly important since job growth this year has notched down compared to the prior couple of years.We think the job picture will remain the important thing to watch.On the supply side,there appears to be little change in the levels overall heading into 2020 versus 2019.Thus ops and demand will have to be there to absorb units in the market and/or keep existing tenants happy and in place.With regards to markets,we didnt come away convinced Southern California will move out of the roughly 2-3%revenue growth range next year.San Francisco may have to get through supply here in the next couple of quarters before that has a chance of re-accelerating.New York to us still seems set up to show improvement.While apartment REITs have attractive capital costs right now,it seems like private markets continue to be heated.To us the single family rental REITs(INVH and AMH)have the best prospects to combine both internal and external growth to drive an outsized bottom line.Industrial:Glass still half full despite significant outperformance.Despite the industrial REIT sectors significant YTD outperformance by 2,500 bps,meeting and hallway conversations tended to focus on strong rent mark-to-markets and investment activity rather than stock valuations and YTD returns.Industrial management teams continued to be bullish about core growth prospects given continued strong tenant demand and embedded pricing power.On the investment front,managements have continued to take advantage of strong capital costs to accelerate acquisition activity(for the acquirers such as STAG and Rexford),and further buildout development pipelines(for the developers).Equally important,managements seemed to be optimistic about 2020 investment prospects as well.Our top idea in industrial continues to be Prologis(PLD OW)based on its robust core and bottom line FFO growth prospects.Office:Tech,media,life science,corporate relocationand repeat.In the office space,the refrain was consistent in terms of where there is strength in rental rates and demand for space.It is in the areas cities and submarkets that have hiring stemming from the tech,media,and life sciences sectors or corporate 3North America Equity Research15 November 2019Anthony Paolone,CFA(1-212)622- relocations.Naturally,this favors the West Coast with regards to tech,media,and life sciences as well as select submarkets on the East Coast and some other areas(i.e.,Austin).And on the corporate relocation front,it tends to favor the Sun Belt.Participating far less in this picture is the broader D.C.metro(save for the improvement in defense segments of that office market)and New York City(save for Hudson Yards,Midtown South,and Chelsea).That said,with the broader economy continuing to chug along,most companies in the office space are doing fine,and the discounted valuations have caught a bid here after a not-so-bad 3Q print,low expectations,and reversal in the markets“momentum/value”trade.Retail:Strips still sidestepping headwinds better than the malls.The best way we can characterize our strip center and mall/outlet meetings is by saying that the strip center meetings were generally about playing offense(with a couple of notable exceptions),and our mall meetings were more about gauging headwinds.On the strip center front,most meetings had a positive tone and touched on box and small shop leasing traction,and how most companies seemed to be a bit more active in terms of putting capital into acquisitions.The two exceptions were two of the blue chips in the space(REG&FRT)that had recently pointed to lower growth 2020s for various reasons.To us,it seemed as if the spotlight shifted to some other stocks in the sector where companies could start to see growth rates improve at the margin.Our mall meetings were more mixed at best.Department store box repositionings were certainly a theme again,but these discussions were more frequently accompanied by liquidity and leverage discussions.Rent spread pressures(ex-department store spread nuances),Forever 21 rent cuts,and SS NOI growth&headwinds took up most of the airtime discussions,but our(last minute)meeting with Simon did have more of capital deployment/investment bias to it.Net-net,though,our mall meetings were a sign that sentiment toward the mall stocks continues to be overwhelmingly negative as we round out 2019.Net lease:The deal environment remains sizable,and no major credit concerns.We had good meetings with net lease REITs overall.Our focus has been on deal pipelines,and all indications were that there is enough product being shown for sale in the market that should enable REITs to be sizable acquirers.The public net lease REITs have quite attractive capital costs and a desire to make acquisitions,but we think it will be important to watch deal flow to make sure there is enough to go around.The total dollar amounts articulated by managements is huge upwards of$60 billion in U.S.deal flow by some measures.While much of this simply wont fit into anyones“buy box,”its a good starting point.Competition from 1031 exchange buyers seems to still be there for single assets,and of course industrial remains heated given the popularity of that property type.On the credit side,there were no major alarm bells going off for most management teams at this point.The other discussion point that came up a lot was the reported potential for an LBO of Walgreens Boots Alliance(WBA Neutral,Lisa Gill)by KKR.The net lease REIT sector has notable exposure to Walgreens stores,with names like O(5.7%of rent),ADC(3.7%of rent),VER(3.2%of rent),and SRC(2.8%of rent)all registering the company as a major tenant.Historically,Walgreens stores have traded at very low cap rates(5s,generally)in the investment sales market,4North America Equity Research15 November 2019Anthony Paolone,CFA(1-212)622- and many(perhaps most)have flat lease terms,making the IRRs low.To the extent a go-private happened and resulted in more financial leverage,we would expect cap rates to move up in the private market,though net lease REIT management teams believe this would be mitigated by 1031 exchange buyers that are still searching for yields with quality operators.Another dynamic is a potential transaction could result in owned stores being put into the market as sale leasebacks.The consensus on this front was that terms would likely be different than the way these boxes have traded previously,and the net lease management teams noted that their appetite for incremental exposure would be largely dependent on the business plan.For more on this topic,see our colleague Lisa Gills note on WBA here.Health Care:Capital deployment thesis continues to play out,but with SHOP trends back in the spotlight.We only had the opportunity to meet with the three larger,diversified,REITs that we cover at the conference this time,and those meetings tended to be very company-specific in nature.The meetings ranged from essentially a 45 min discussion of SHOP and 2020 FFO headwinds in our VTR meeting(albeit with management underscoring that it is highly focused on plugging the hole),to walking through major repositioning/de-risking initiatives and development opportunities at PEAK(formerly HCP),to how WELL believes that it can source investment activity that is consistent with how it sees health care delivery(and a focus on wellness)evolving in the future.Taking a step back,the common theme that we see with all of the companies in our health care coverage universe(including HR,HTA,&MPW)is that we have seen a pickup in new investment activity across the board in 2019.This dynamic is consistent with our upgrade thesis from last year which suggested that managements would take advantage of enhanced capital costs to increase investment activity.5North America Equity Research15 November 2019Anthony Paolone,CFA(1-212)622- Residential TakeawaysAmerican Campus Communities(ACC Neutral$46.81)On the topic of Austin(where the company has underperformed and caused pressure this most recent leasing season),it does not see the recent performance as changing its long-term commitment or bullishness on the market.We think containing expense growth is going to be something that is important for ACC.We say this because with revenue growth generally looking like it will be in the 2s organically,there isnt much room for margin expansion without containing costs.On this front,one thing management noted was that because it has so many new developments,the assessments tend to go up in the earlier years as the values become apparent to assessors.Over time this dynamic should be diluted down with a larger and older portfolio.Management sees its capital recycling as very accretive given sales cap rates in the low 4s and development returns in the 6.25-6.75%range.Nonetheless,timing could still cause some earnings drag.The company is pleased with its pipeline of P3 deals.AIMCO(AIV Neutral$53.82)Management was very bullish about growth prospects in our meeting as its core is performing well and dilution from asset sales in the past 12-18 months should abate heading into 2020.AIV had the second highest same store revenue growth in the apartment REIT peer group in 3Q(3.8%versus the average of 3.5%).AIV has been able to pick up occupancy YTD and stood at 96.8%in 3Q19(up 40 bps y/y)and ran at 96.9%YTD through 3Q19 versus 96.3%during the same period last year(up 60 bps y/y).Management said it was pleased with the result but said that there might be opportunity to push occupancy further in 2020,which would be a tailwind to revenue growth.Further,on the occupancy front,AIV feels that structural limit of occupancy can be as high as 98.5-99.0%,so there could be further opportunity to improve stabilized occupancy over time,though we think this intuitively sounds high across a large diversified portfolio.When asked about lower occupancy in New York versus the portfolio average,AIV said that it was more a function of redevelopments that impact occupancy and not a structural issue.Management feels that it could be a little more aggressive on renewal rent increases and will watch how markets trend to see if there is an opportunity to push harder next year.6North America Equity Research15 November 2019Anthony Paolone,CFA(1-212)622- Turnover continues to decline(for 12 months ended 3Q19 it was 44.8%,or down 40 bps y/y),and management said that its focus on customer satisfaction and move-in experience is a direct contributor of that.The average age of AIVs residents is about 36 years old and that this number has trended up slightly over the years.Higher average age may also be a contributor to lower turnover as older/more established residents tend to move less.Asked about move outs,AIV said that the most common reasons for move outs are career moves and purchasing a home,with pricing being a low contributor to move outs;about 18%of tenants said they moved out due to pricing.This continues to reinforce AIVs view that focusing on the customer experience is paramount as it should drive lower turnover and higher rate growth.With respect to capital allocation,management likes its current exposures with the only notable shifts being Chicago,which it feels may be an eventual exit,and Atlanta,which the company feels has been a little tougher for it than anticipated.Company would like to increase its exposure to Manhattan but has not been able to find deals or justify current valuations,hence,it has stayed on the sidelines.Miami was another market mentioned as the growth area for the company given the scarce land quantity(everglades on the left and ocean on the right).America