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The 2013 All-America Research Team: REITs, No. 1: Stephen Sakwa

Stephen Sakwa and his ISI Group quintet earn top honors for a fourth year in a row.

Stephen Sakwa
& team
ISI Group
First-place appearances: 4

Total appearances: 5

Team debut: 2009

Stephen Sakwa and his ISI Group quintet earn top honors for a fourth year in a row. The researchers “translate macro data into real estate fundamentals in a consistent way,” one admirer notes. Although real estate investment trust fundamentals still show improvement, and pricing power is healthy in several areas, Sakwa, 46, says the increase in long-term interest rates is hurting the sector. “While borrowing costs still remain attractive for REITs, general equity investors have been very cautious on the group and have found the valuations expensive,” he explains. “The key is figuring out where and when bond yields will peak in the next six to 12 months,” since moderating bond yields would help establish a floor for the sector and allow valuations to stabilize. The team recommends buying names that have limited near-term capital needs or those that can fund their growth with retained cash flow to minimize the demand for equity and debt capital. Examples include American Tower Corp. of Boston, Chicago’s General Growth Properties and Indianapolis-based Simon Property Group. Sakwa, another fan says, “has great, in-depth and thoughtful insights.” — Carolyn Koo


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