Off to the Races – RWR, CBG, SLG, BXP zt

何鸿燊

BY Billy Fisher - Contributor

The commercial real estate sector is off to the races, but are these stocks getting ahead of themselves?

Road to Recovery

The SPDR Dow Jones REIT ETF (NYSE: RWR) has moved up the charts 9.8% in the past four weeks alone and has outperformed nearly 90% of all ETFs tracked by Morningstar over this same time period. There have been some positive developments for traders in this space although the steep run-up in many of these stocks to new 52-week highs may require more positive news to sustain this upward trend.

According to Reis Inc., average net rents for office space slid 0.8% during the first-quarter of 2010. Rates are down 7.4% on a year-over-year basis. Granted these comparisons are not favorable, but there have been pockets of success. Office rents were stable or increased in 23 of the 79 markets that Reis tracks. Considering that rents dropped in 70 of the 79 markets in the fourth-quarter, traders must ponder whether this Q1 trend is a sign of stability or whether it just shows how far the sector has to go.

Higher Highs

Scanning individual names, there have been some notable success stories. Shares of CB Richard Ellis (NYSE: CBG) have soared more than 240% over the past year and are trading at a 52-week high. The stock was recently added to the Goldman Sachs conviction buy list. And last month the company launched an expansion of its solar energy services group.

Earlier this year, Boston Properties (NYSE: BXP) announced that its Q1 funds from operations swung to a $1.04 per share profit versus a loss of $0.01 per share in the same quarter of the prior year. BXP’s stock price has nearly doubled over the past 52-week period.

A third major player in the space that is also trading near a 52-week high is SL Green Realty (NYSE: SLG). This REIT recently capitalized on thawing conditions by raking in proceeds of $250 million from the private placement of senior unsecured notes.