Posted on: January 01, 2008

AFT Index Bounces Back

By Margot Crabtree

Click here for the AFT Index

The AFT Stock Index enjoyed a robust trading session and rose along with the major markets as our session ended April 9. A report from research firm Reis, Inc., noted that demand for apartments is stable despite availability in the housing sector.

"The apartment markets are benefiting from the deterioration in housing and a larger pool of potential renters," said Reis chief economist Sam Chandan in a statement. "Potential buyers see renting as an increasingly attractive alternative." This rise in demand has helped fuel the appetite for apartment real estate investmen trusts (REITs), Chandan said in the report. As our session drew to a close, the AFT Index marked an increase of 79.31 points, or 8.88 percent, and closed at 972.44. Advancing issues had a decided edge over declining issues by a 6-to-1 margin.

National markets also enjoyed an upswing as the old quarter ended and the new one began. Central bankers worldwide coordinated efforts with a cash infusion into the global system to keep tightening credit from having a domino effect on the rest of the economy, and the Fed injected more than $200 billion into financial markets March 10. The Fed also cut interest rates by 75 basis points at its regularly scheduled meeting March 18. Volume was thin for much of March as investors sat on the sidelines waiting for a warmer investing climate. Our session ended just as companies began to report their earnings for the season.

Essex was clearly the top dollar gainer this session, adding $10.99, or 10.82 percent, to end at $112.55. Research firm Stifel Nicholas initiated coverage on Essex with a rating of "hold," but it was strong growth rates in Northern California and the Pacific Northwest that helped boost Essex, with its stock up 22 percent for the year.

Stifel Nicholas also weighed in on Post Properties, boosting it to a rating of "buy" from "hold," but a later downgrade of the REIT sector by Lehman Brothers analyst David Harris swept Post Properties downstream. Harris said a slower economy and a shrinkage in jobs is not a good thing for rents, and he cut his estimates for not only Post, but also for AFT Index components AvalonBay, AIV, Camden Property, UDR, and Equity. Harris said he expects that companies in the sector will cut their profit targets because of the economic downturn. Post Properties slipped $3.38, or 8.29 percent, and was the top dollar and percentage loser this session. Post ended at $37.40.

Associated Estates jumped $1.54, or 15.75 percent, and was the top percentage gainer this month. Associated announced the sale of 10 of its 11 affordable properties to a privately held buyer in Ohio. The company's remaining affordable property is under contract and is expected to sell in the second quarter. The company also increased its credit facility to $150 million, from its previous $100 million. Associated Estates ended at $11.32.