REITs (real estate investment trusts) depend on debt and equity for their working capital, and so they’re directly impacted by the Fed’s interest rate policy.
Timberland REIT (real estate investment trust) Weyerhaeuser (WY) has been able to use the opportunities of the booming housing sector to its advantage.
The growing economy has helped REITs including Weyerhaeuser (WY), Rayonier (RYN), Resolute Forests Products (RFP), and International Paper (IP) reap higher profits.
Small-caps under $10 billion market capitalization outperformed large-caps last week and rose 3.5%. The sense was that the global sell-off has eased for now and investors may be turning bullish.
For the week ending November 20, 2015, the iShares US Real Estate ETF and iShares Mortgage Real Estate Capped underperformed the SPDR S&P 500 ETF Trust.
Stocks at the top of the SPY ETF on November 9 were Plum Creek Timber, Apache, and Norfolk Southern. They gained 17.3%, 13.2%, and 11.0%, respectively.
Given the antitrust risk in the Plum Creek Timber-Weyerhaeuser merger, it probably should trade at a risk-to-reward ratio of about 5:1, which works out to a spread of $1.66 and an annualized spread of 9%.
The spread in the Plum Creek Timber-Weyerhaeuser merger is trading slightly negatively (about 6 cents), but the positive dividend carry gives the deal a positive spread.
The price-to-book value ratios of Plum Creek Timber, Weyerhaeuser, Rayonier, Louisiana-Pacific, and Potlatch are 4.67x, 3.08x, 2.04x, 2.39x, and 5.83x.
Farallon Capital Management sold its position in Weyerhaeuser Co. (WY) during the third quarter. The stock accounted for 1.16% of the fund’s total 2Q14 portfolio.
Farallon Capital Management initiated a position in International Game Technology (IGT) during the third quarter. The position accounted for 2.21% of the fund’s 3Q14 portfolio.
Farallon Capital Management started a new position in Tim Hortons Inc. (THI) during the third quarter of 2014. The position accounted for 2.62% of the fund’s 3Q14 portfolio.
TRI Pointe Homes is one of the top ten–largest public homebuilders by equity market capitalization in the US. The company reaffirmed its 2015 outlook for earnings per diluted share in the range of $1.25 to $1.40.
