To determine the best REITs, we employ a multi-step process of REIT valuation. Our company-level analytical work includes the following:
It is important to note that we employ a relative pricing model when conducting our REIT analysis and making our company-specific BUY/HOLD/SELL recommendations (we discuss the overall pricing of REITs in our RMZ Forecasting Tool). We generally have an equal number of Buy-rated stocks and Sell-rated stocks within each property sector. In essence, we answer the question of which REIT stocks are overpriced and which stocks are underpriced at any point in time.
The effectiveness of our REIT analysis methodology is demonstrated through the impressive performance of our investment recommendations (View Track Record). The strength of our research is rooted in the focus that we place on property-level analysis through our published reports. Green Street analysts focus solely on their analytical work, and providing support to our clients – we are not distracted by obligations faced by typical Wall Street analysts, such as supporting investment banking activities.
Our NAV-based pricing model has served as our primary tool for valuing REITs since 1989. The model is based on the logic that REIT valuation can best be assessed by analyzing separately the two key components of value: