Bullish on Residential REITs

Apartment real estate investment trusts are getting a boost from analysts at several firms this week. A measure of apartment vacancy rates fell for the first time in three years, during the second quarter. Research firm, Reis concluded that vacancy rates fell 0.2 percent to 7.8, over the second quarter. Rents for apartments grew by 0.7 percent and the firm believes that landlords could be able to raise rents by 4.6 percent by year end. Following the report, UBS and Morgan Keegan raised their buy ratings for several of the companies in the sector. While there are issues with potential oversupply in certain markets, the apartment sector maybe an interesting choice for investors wanting income, but are afraid to go into office and industrial REITs. One of the largest landlords, AvalonBay Communities AVB reported increased demand for its units. Shares of AvalonBay yield 4 percent. Camden Property Trust CPT received an upgrade to buy from UBS and yields 4.4 percent. Believing that UDR’s UDR management can top expectations; Morgan Keegan was especially bullish on the apartment owner. In addition, the stock recently won praise from Zack's as majority of its portfolio located in California, Florida and on the Atlantic Coast where the rent/own spread is still quite high. Shares of UDR yield 4 percent.