Liberty Property Trust (LRY) trades at a discount to other REITs due to its exposure to suburban offices and industrial properties, and the pickup in GDP and employment trends could drive growth for the REIT, along with increased dividends, says David Abella, Senior Portfolio Manager at Rochdale Investment Management.
“The price to FFO, which is the main metric in REITs, is 14 times. That’s a great value in our view. The stock pays a 5.1% yield, and that’s higher than REITs on average, but the main reason we like it is this is a company that we feel can do a lot better with economic improvement,” Abella said.
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Abella says the concerns that interest rates may affect REITs like LRY are concerns for the short term, and he says in the longer term what’s more important is the improving economy and the REITs’ ability to drive occupancy and rents thanks to it.
“The stock trades at a 7% discount to the group, and that group of suburban office and industrial REITs is a little cheaper than other REITs in general. So you are getting into a cheaper sector and at a discount to the group. And it’s a very well-run, very conservative company as well so that’s pretty important. Management makes acquisitions and divestitures of properties on a very careful basis, and so we feel there is solid value in the name and see upside with better economic growth,” Abella said.
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