Douglas Emmett REIT Targets L.A.'s Best Neighborhoods


Douglas Emmett ( DEI ) went public in 2006 as the largest real estate trust ever at that time, raising $1.6 billion.

It wasn't the best moment to invest in this particular REIT. It lost 80% of its value in the wake of the financial crisis and has been working its way back ever since. From a 2007 high of 29.28, it now trades near 25.

Its strategy is simple. It buys and manages upscale apartment buildings and big office buildings in Los Angeles County's tiniest neighborhoods. Think Beverly Hills, Brentwood, Santa Monica, Westwood and Century City on the Westside and Burbank, Sherman Oaks/Encino and Woodland Hills in the San Fernando Valley.

It owns the iconic high-rise office building at 100 Wilshire Blvd. in Santa Monica, which overlooks Bluff Park, the beach and Santa Monica Bay. Since 2010, it's owned the nearly 1 million-square-foot Bishop Square office project, Honolulu's largest office complex. It claims a 36% market share of office space in Honolulu's central business district and a 25% market share in its targeted Southern California neighborhoods.

Douglas Emmett gets 87% of its revenue from its office properties.

Funds from operation dropped in 2012 from $1.39 a share to $1.37. Analysts expect $1.49 this year and $1.55 next year.

It currently pays a 72-cent dividend, which works out to a yield of 2.9%.

The stock has been underperforming the market since mid year. It has a Relative Price Strength Rating of 36, which means 64% of stocks have outperformed it over the past year.

The stock appears to be forming a long base. It's corrected 21% over 24 weeks and now may be building the right side of a double-bottom formation.

The Accumulation/Distribution Rating is B-, which means there has been some institutional buying.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: DEI

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