9-22-04                                                                                           Vol. 8: No. 8 RealtyStocks' Observer If you're not receiving this free monthly e-newsletter, please register. Monthly Feature: President Bush's Reelection Sparks Stock Rally, But REITs Fall with Interest Rate Jump. A. President's Reelection Raises Stocks B. Strong Job Growth Raises Rates, Hurts REITs C. Fallouja D. Equity REIT Performance E. Large Cap REIT Performance F. Mortgage REIT Performance G. Realty Corporations A. PRESIDENT'S REELECTION RAISES STOCKS Four more years. This Republican convention chant came true, with President Bush having a more decided political victory than his first election. He won the popular vote by 3.5 million votes and his win of 31 states created a "sea of red" depicted on maps for states carried by Bush over the vast portion of the U.S. The states he lost to Kerry were only concentrated in the Northeast, the West Coast and a few states on the Great Lakes. Most importantly, voters also gave Republicans 10 more seats in Congress and 5 additional seats in the Senate. With the defeat of the Democratic leader Senator Daischel and a Republican Senate that will be just 5 votes short of the 60 needed to stop fillabusters, the Senate is poised to approve more Repulican innitiatives. Though political pundits cited that the Democratic Party may be in turmoil, if only 70,000 of 5.5 million voters in Ohio would have voted for Kerry instead of Bush, we would have a new President. The difference might have simply been a one day visit by Governor Schwartzenegar to Ohio shortly before the election. But the decisive issue of the 2004 election, which garnished relatively little attention during the Presidentila debates, was on moral issues. In particular, voter turnout was particularly strong for Bush in states with innitiatives to ban Gay marriage, and over a dozen states this year have approved such bills. Regardless of your political view, the stock market was relieved of not only political uncertainty, but also that there was no terroist incident. The easing of oil prices through most of last week also helped. As a result, all major indices responded favorably this past week. In addition, an affirmation of the stength of the eoncomy with strong employment growth, as discussed in the following.   Top B. STONG JOB GROWTH RAISES RATES, HURTS REITS This past Friday a job gain of 337,000 was reported, the largest for seven months. It was a surprise to most economists who predicted a growth of only half as much. In addition, the job gains for the previous two months were revised upwards. This created more certainty that the economy was growing. As a result, the Federal Reserve appears more likely to continue raising the discount rate this coming month, which may also be creating new upward trend to longer term interest rates. A major critism of Bush during the Presidential Campaign is that he would be one of the first President's to precide over a decling job market. However, with a similar job increase next month, this deficit would be erased and Bush would avoid this ominius position. C. FAllOUJA The battle that began this Iraq city about 40 miles from Battle Top D. EQUITY REIT PERFORMANCE Equity REITs had an increase in August of 4.41%, continuing their fourth consecutive monthly increase. The best group for August was Retail Malls & Centers gaining 9.11%, followed by the best performer last month, Offices, with a gain of 8.56%. All groups for the month posted a positive gain with the worst group again Hotels, with a gain of 0.96%. The best performing group Year-To-Date (YTD) was Retail Regional Malls, gaining 18.36%. The worst performing YTD group was MHParks, losing -7.63%. The best performing Equity REIT for August was Rouse (RSE) with a gain of 32.2%, due to its planned $7.2B acquisition by General Growth (GGP). The worst monthly performers for the month were American Residential Inv. Trust (INV) and Jameson Inns (JAMS), losing -17% and -10.4%, respectively. The best performing REIT YTD was Alexander's Inc., gaining 56.4%. The worst YTD performer was Health Car Property Investors (HCP) with a loss of 50.3%. (Please see Equity Gainers and Losers.).   Top E. LARGE CAP REIT PERFORMANCE Large Cap REITs had a stellar gain of 5.8% for August, but were slightly shy of the broader monthly REIT performance. The best large cap performer for the month was Rouse (RSE) gaining 32.2%, due to its intended acquisition. The worst performing large cap REIT for the month was the firm that announced its acquisition of Rouse, General Growth, which fell -3.7% amid concerns over the debt it would need for the acquisition. The best YTD performer is St. Joe Company (AVB), gaining 25.7%. The worst YTD performer is Crescent Real Estate Equities (CEI) losing -6.8%. Please see Large Cap REITs.)   Top F. MORTGAGE REIT PERFORMANCE The mortgage sector posted a monthly gain in August of 2.9%, but again underperformed Equity REITs. With this gain, Mortgage REITs reentered positive territory and have a YTD gain of 1.2%. For the last three years Mortgage REITs significantly outperformed Equity REITs, but this year is different. The best performing group for the month was Commercial Mortgages, gaining 4.65%. The best performer for August was Capital Trust (CT), up 12.4%. The worst performer was Impac Commercial (ICH), losing -8.6%. YTD, Imperial Morgage was the best performer with a gain of 40.4%. The worst YTD performers was BRT Realty Trust (BRT), losing -28.9% and -22.8%. (Please see Mortgage Gainers and Losers.)   Top G. REALTY CORPORATIONS Realty and Housing Corporations had a 5.53% for August, with all groups in positive territory except one. The best groups for the month were OnSite Technology followed by Property Services, both with gains slightly above 11%. The worst group for the month was Resorts with a loss of -2.07%. The best performing group YTD was Developers, gaining 41.13%. The worst performing YTD group was Tech & Net, losing -20%. The best performing Realty Corp. stock for August was Grubb & Ellis (GBEL.OB) with a gain of 95.1%. The worst performing stock for the month was Heartland Partners (HTL), dropping 25.8%. The worst YTD performer was Tut Systems (TUTS), losing -67.2%. (Please see Realty Corp. Gainers and Losers.)   Top Stock Changes. Deletions include Bando McGlocklin Capital, Foster Wheeler (FWLRF.ob) and, undergoing liquidation, Philips Int'l Realty (PHIR.OB). Note: In reporting group percentage changes, if a stock is under $2 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, and are calculated as of the end of each month. 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 judgment 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! 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