Zacks Industry Outlook Highlights: AvalonBay Communities, The St. Joe Company and Plum Creek Timber

CHICAGO, June 9, 2011 /PRNewswire/ -- Today, Zacks Equity Research discusses the Real Estate Investment Trust (REIT) industry, including: AvalonBay Communities, Inc. (NYSE: AVB), The St. Joe Company (NYSE: JOE) and Plum Creek Timber Co., Inc. (NYSE: PCL).


A synopsis of today's Industry Outlook is presented below. The full article can be read at

With a continued decline in the single-family homeownership rate across the U.S. and gradual improvement in the overall economy, apartment REITs have performed strongly in first quarter 2011. We expect this sector to remain comparatively stable in the coming quarters, as renting has emerged as the only viable option for customers who could not get mortgage loans or are unwilling to buy a house at present.

In this environment, we remain bullish on AvalonBay Communities, Inc. (NYSE: AVB), one of the best-positioned apartment REITs, primarily focused on developing multi-family apartment communities for higher-income clients in high barrier-to-entry regions of the U.S. AvalonBay has Class A assets located in premium markets, such as Washington DC, New York City, and San Francisco, where the spread between renting and owning is still high despite home price declines.

In addition, AvalonBay has a reasonably strong balance sheet with moderate near-term debt maturities and adequate liquidity. Consequently, the company can capitalize on potential acquisition opportunities due to distressed selling from owners and developers who cannot refinance their properties, which augurs well for its top-line growth.

We are also bullish on The St. Joe Company (NYSE: JOE), an operationally diverse real estate company. St. Joe is the largest private landowner in Northwest Florida, and is one of the largest real estate developers of the region, engaged in town, resort, and industrial development in addition to land sales and commercial real estate operations.

The opening of the Northwest Florida Beaches International Airport, developed by St. Joe, is the first new international airport opened in the U.S. since the 2001 terrorist attacks, and is expected to become a major growth driver for the region. The airport greatly increases the future value of its holdings, and provides an upside potential for St. Joe.

The company also launched Venture Crossings Enterprise Centre at West Bay -- a commercial development spanning 1,000 acres adjacent to the new airport, for industries, offices, retailers and hotels, which will likely have a positive economic impact on the region in the long run.

Another stock worth mentioning is Plum Creek Timber Co., Inc. (NYSE: PCL), a timber-REIT that owns one of the largest and most geographically diversified private timberland in the U.S. Plum Creek's diversified timber and land base provides excellent operational flexibility to respond to changing market conditions amid challenging macroeconomic environment.

In addition, the upsurge in demographic trends driving housing markets and demand for real estate properties across the nation provides a strong economic backdrop for the company to demonstrate solid financial performance in the future. The company is also likely to continue to defer harvest and sell off non-core timber assets in order to fund its dividend and maintain significant liquidity. This defensive behavior seems appropriate given the company's stated objective of maximizing long-term value and maintaining a stable dividend payout.

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