4-14-01                                                                                           Vol. 4: No. 4 RealtyStocks’ Observer If you're not receiving this free monthly e-newsletter, please register. Rent a Condo for the 2002 Winter Olympics! See: ParkCityTownhome.com Monthly Feature: THE EASTER BUNNY HOP & THE EGG HUNT A. The Easter Bunny Hop B. The Egg Hunt C. Large Cap REIT Performance D. Equity REIT Performance E. Mortgage REIT Performance F. Realty Corporations G. Real Estate Mutual Funds (REMFs) A. THE EASTER BUNNY HOP April 15th was not the traditional tax filling deadline this year. Instead, it was Easter. The dreaded tax day needed to move back a day to make way for the week of the hop. The Easter Bunny had quite a jump the last several days. Nasdaq suffered its worst percentage declines in decades, but seemed to have hit some type of bottom a week ago and staged a major bounce-back of about 25% this past week. The Dow Jones Industrials have also gone up, albeit more modestly. Other stock indices also performed well recently. However, not everyone believes the bear has died and a new bull has risen. A consensus of most analysts is that the recent surge in the Nasdaq is an overdue correction from an oversold market. It was pleasant to know that the tech market in particular has more than one constant trend. However, whether this is a bear market rally or truly a new bull is where the analysts are quite divided. This coming week includes significant earning announcements and some major economic releases. The tone of the market for the next month or so could be better known soon. Within the next couple of months we should know if we have entered a recession (yes, the R word is being used), or somehow managed to jump away from it. A few bold and notable people have claimed that we have not entered a recession in the first quarter of 2001. However, few people are making any strong projections about this second quarter. The best and most wishful scenario from this past week is that the economic slowdown will last at least another couple quarters, but should firm towards the end of the year with a robust 2002. Similar to the rent spikes forecasted almost a decade ago by many astute real estate professionals, some economists see a jump in economic growth next year. Therefore, the dismal earning outlooks for so many tech companies for the next year or two could jump as early as next year and possibly more the following year. Unfortunately, when you look at the earnings and valuations of many tech stocks, this must be the case in order to support higher prices in most situations. Among certain REITs, a hop in a downward direction appears to have started, especially with those with exposure to California office properties. Due to concerns not only with energy, but also potential loss of space to major technology tenants, such REITs as Mission West and, to a lesser extent, Equity Office and Spieker, have seen a drop in their prices recently. This concern may begin to spread among REITs with office concentrations other than California. Some analysts fear that, especially if the coming summer is a hot one, it may also show escalating energy costs in other parts of the country such as major east coast cities. Although the present increase in energy expenses are normally passed through to the tenant and should not have an immediate impact upon REITs, the market may grow more concerned with the longer term consequences of occupancies, rental income and values. It will be important to see if this price pressure on REITs begins to spread. (Please see Large Cap REITs.)   Top B. THE EGG HUNT Finding good stocks and easy-to-find better eggs can be a bit like an egg hunt. The good opportunities, just like the eggs easy to find, are picked up quickly. The challenge is finding the ones not immediately visible. The eggs remaining are normally better hidden and are more difficult to find. It takes more time and looking, especially to find the golden eggs. Since the growth aspects of REITs are considered more modest and predictable, and the aspect of under valued REITs are much less compelling than a year ago, the prospects to find a golden egg among REITs appears limited. Just finding modestly rewarding REITs are no longer easy picking either. New concerns over energy and the economy, as previously mentioned, can provide more negative than positive surprises. This may cause an increasing number of REITs to show more price weakness, but probably rather gradually. What can continue to help REITs out are the absence of fairly safe places to invest today, especially with some attractive dividends. This is what has made REITs one of the best performing sectors so far this year. (Please see Large Cap REITs.)   Top C. LARGE CAP REIT PERFORMANCE As typical of all three months so far this year, the large caps have underperformed the larger REIT index. March was their worst performance of 2001 with a loss of -4.6%, also the second similar such loss in a row. All but 5 of these 20 stocks were negative for both the month and the year. The worst monthly performers were Vornado Realty Trust (VNO) and Carramerica (CRE), down -5.6% and 5.5%, respectively. The best perforemer for March was Crescent, up 4.7%. For the year, the best performer through March was Spieker (SPK) gaining 9.4% and the worst was Equity Office, dropping -14.2%. (Please see Large Cap REITs.)   Top D. EQUITY REIT PERFORMANCE Equity REIT prices were slightly up 0.09% in March. The performances of the property groups were mixed; more groups declined than increased. The best monthly performing groups were HealthCare, MH Parks, and Self-Storage, gaining 7.26%, 5.30% and 4.77%, respectively. The worst group for the month of March with a loss of -5.81% was Retail Factory Outlets. This year the favored REIT groups from last year, Offices and Apartments, continue to be the worst performers losing -4.29% and -2.08%. The best performing groups so far in 2001 are those with the highest dividends, such as Health Care and Specialty, jumping 18.9% and 15%. The best performing Equity REITs for March were United Mobile Homes, Inc. (UMH) and National Health Investors (NHI), up 27.2% and 24.4%, respectively. The worst monthly performers were, Humphrey Hospitality Trust (HUMP) and Center Trust, Inc. (CTA), down -48.3% and -37.8%, respectively. The best performers YTD are Meditrust (MT) and National Health Investors, Inc. (NHI), up 59.2% and 57.7%, respectively. The worst performers YTD are Humphrey Hospitality Trust (HUMP) and Omega Healthcare Investors, Inc. (OHI), down -47.4% and -42.7%, respectively. (Please see Equity Gainers and Losers.).   Top E. MORTGAGE REIT PERFORMANCE Mortgage REITs faired better than their Equity cousins did in March, posting a 2.71% gain. Mortgage REITs have increased during each of the last three months and continue to be helped by the downward pressure on interest rates. The best performing Mortgage REIT group was Residential & Commercial Mortgages, up 9.17%. The best monthly performing Mortgage REITs were Dynex Capital (DX), up 31.6% and Novastar Financial, Inc. (NFI), up 13.5%. The worst performers for this period were Impac Commercial (ICH), down -25.8%, and Allied Capital REIT (ALLC), falling -16.1%. %. The best performers YTD are Novastar Financial, Inc. (NFI) and PMC Commercial Trust (PCC), up 57.7% and 49.7%, respectively. The worst performers YTD are Impac Commercial (ICH) and Capital Trust (CT), down -24.1% and 10.9%, respectively. (Please see Mortgage Gainers and Losers.)   Top F. REALTY CORPORATIONS Realty and Housing Corporations declined -6.35% in March. What dragged down this group in particular were OnSite Tech and Tech & Net, down -34.6% and 34.5%, respectively. The best monthly performing groups were Developers and Home Builders, up 4.2% and 3.15%. The best monthly stocks were Perini Corporation (FWC) up 69%, Southern Energy Homes (SEHI) rising 43.8% and Price Enterprises (PREN) up 35.2%. The worst monthly stocks were Winstar Communications (WCII) and Washington Group Int'l (WNG) down -82.8% and -80.9%. The best performers YTD are Foster Wheeler Corp. (FWC) and Perial Corporation (PCR), up 242.1% and 141.7%, respectively. The worst performers YTD are Internet Pictures Corp (IPIX) and Winstar Communications (WCII), down -83.9% and -81.6%, respectively. (Please see Realty Corp. Gainers and Losers.)   Top G. REAL ESTATE MUTUAL FUNDS (REMFs) The changes in the favorite REIT groups, discussed in our previous newsletters, continues to impact REMF performance. The average fund dropped -2.08% in March and all but 4 of the 118 REMFs were negative for the month. A fewer number of REITs are going up, and as noted, the large cap REITs that were the favorites of mutual funds have been especially weak. The foreign oriented REMFs were no longer the best as they were last month. Instead, the REMF with one of the highest dividends, Stratton Monthly Dividend, was the best performer with a gain of 2.04%. Cohen & Steers Equity Income funds also posted positive returns. For the year, 20 of 143 realty funds are still positive. The best performers for 2001 so far are Stratton, Kensington and Alpine, showing positive returns of 8.91%, 7.3% and 5.81%, respectively. (Please see REMFs.)   Top Note: In reporting group percentage changes, stocks that were under $1 are excluded from our calculations. If a stock is under $1 for more than two months, it is subject to removal from our coverage. All gains or losses regarding Realty Stocks are price changes only; dividends are excluded. Disclaimer: The material provided herein should not be taken as endorsements or recommendations to invest in a stock, fund, a group of stocks or other securities. No guarantee can be made as to the expected performance of such investments. Investors should consult all available information, including data external to RealtyStocks and associated Web sites, and exercise own best judgement before making any investment decisions. The author may have equity positions in some of the companies covered in RealtyStocks, which may change from time to time, and will divulge such information upon request   Top InRealty Sponsors Inquire about our special advertising banner promotions! E-MAIL: stocks@inrealty.com Copyright ©1998-2001, WebVisers Inc. All rights reserved .