1. Student Investment Management – Stock Presentation: Real Estate
Presented By: Mark Wilson, Rohit Kejriwal, Shuocun Yang

2. REIT Overview: Size of Sector

3. Current Holding DIGITAL REALTY TRUST INC (DLR) 1.06% in Portfolio
Beta 0.66
EQUITY RESIDENTIAL (EQR)
1.04% in Portfolio
Beta 0.75

4. Stock Analysis

5. Digital Realty Trust Company Overview
REIT that focuses on data centers. Digital Realty's customers include domestic and international companies across multiple industry verticals ranging from information technology and Internet enterprises, to manufacturing and financial services. Digital Realty's 228 properties with 18.3 million square feet.
Digital Realty does its business in 31 markets throughout Europe, North America, Singapore and Australia

6. Digital Realty Trust 7.7% price increase in the past 12 months
40% price increase in the past 2.5 years

7. Equity Residential Company Overview
Equity Residential is a real estate investment trust that focused on the acquisition, development, management of rental apartment properties in urban and high-density suburban coastal cities. The company is an S&P 500 company.

8. Equity Residential

9. Equity Residential Key Business Driver Key Risks
Strong economic growth
Strong job opportunities growth
High cost to own home
High population density
Large amount of affluent potential customers
High barriers to entry due to scarcity of land and government regulation.
Limited supply of new apartment properties
Higher interest rate
Higher mortgage rate
Higher Unemployment rate
Lower apartment occupancy rate
Lower apartment rent
Lower potential customer number

10. Equity Residential
Relative Financial Ratios

11. Equity Residential
DCF Model

12. Equity Residential
Sensitivity Analysis

13. Duke Realty

14. Duke Realty
Valuation

15. Duke Realty
DCF

16. Boston Properties
Boston Properties (BXP) is a real estate investment trust (REIT) based out of Boston, Massachusetts. BXP was founded in 1970 and filed for its IPO in The company is one of the largest owners, managers, and developers of Class A office properties in the United States. BXP has a primary footprint of 5 major metro areas: Boston, Los Angeles, New York, San Francisco, and Washington D.C.
Tenants by Industry

17. Boston Properties

18. Boston Properties

19. Boston Properties
Valuation

20. Boston Properties
The company is a relatively safe investment because it owns 41.9MM square foot of Class A office space in 5 of the largest cities in America. We valued the company using a combination of a discounted cash flow model in a base case and downside case. The company was also value using an income capitalization approach in a base case and downside case.

21. Sector Overview

22. Life Cycles

23. Effect of Interest Rates
Interest rates are negatively correlated with REIT returns. The correlation is -.66, which is moderate-high.
Interest rates are currently at very low levels, and will inevitably increase in coming years.

24. Current Trends in Real Estate
Construction activity is currently at peak levels, implying that REITs are either in the expansion stage on hyper supply stage
However, REIT occupancy rates are at the highest levels since 2000, which implies that REITs are in the expansion stage, since hyper supply range is correlated with declining occupancy
Given the large development pipeline in real estate right now, it seems likely that the hyper supply stage is imminent

25. Recommendation

26. Final Recommendation Final Recommendation: Hold current stock.
Keep REIT underweight to S&P 500.

27. Questions??? Thank You!