Longtime holdings in the fund that reflect his philosophy include Regency Centers (REG), one of the country’s pre-eminent grocery-anchored shopping center owners and developers. Founded in 1963, the company went public in 1993 and has a market capitalization of about $8.7 billion. Eighty-six percent of its portfolio of properties, which are centered in major metropolitan areas such as Los Angeles; Washington, D.C.; Houston; and Atlanta, have grocery stores as their anchor. It has both short-term and long-term debt maturations, which gives it some protection in a rising rate environment. 

REITs that focus on retail shopping malls are also represented in the fund, and Lee sticks with those that focus on Class A malls with well-known stores. “Despite rumors of the death of shopping retailers, we still believe that a bricks-and-mortar presence in the best malls is still desirable,” he says. 

General Growth Properties (GGP) is the second-largest retail mall property REIT, by market capitalization, in the fund, and its portfolio includes 20% of the high-quality malls in the U.S. Headquartered in Chicago, this REIT owns and manages 131 retail malls in 40 states. Another retail REIT in the fund, Urban Edge (UE), was created last year as a spin-off of Vornado Realty Trust. Most of its mall properties are in the New York metropolitan area. 

In the apartment sector, Equity Residential Properties (EQR) is “well positioned to ride the broad demographic shift by millennials and empty nesters toward more urbanized apartment living arrangements,” Lee says. Its portfolio focuses on the core coastal markets in Boston; New York; Washington, D.C.; Seattle; San Francisco; and Southern California. With median home prices of more than $500,000 in these key areas and  strong demand for units, the average rents exceed $2,374 per month. 

Douglas Emmett (DEI) is a longtime fund holding that focuses mainly on office buildings in Southern California and Hawaii. With development in its core Los Angeles area severely constrained by restrictive zoning laws and anti-development community groups, the company has a strong foothold in an area that poses high barriers to entry for its competitors and contains limited office space. Leases that specify 3% to 4% annual rent increases protect cash flows. “The Southern California area has been a little slower to participate in the economic recovery and is less glamorous than Northern California, but Douglas Emmett has done a fine job within its market,” Lee says.
 

First « 1 2 3 » Next