AEW Capital Knows Real Estate and These Are Its Top Picks

#3. Prologis Inc (NYSE:PLD)

– Shares Owned by AEW Capital Management (as of June 30): 6.22 Million

– Value of The Holding (as of June  30): $305.09 Million

Prologis Inc (NYSE:PLD) was another stock in which AEW Capital Management reduced its stake by 2% during the second quarter. The stock of the logistics real estate company has performed remarkably well this year, appreciating by almost 24% so far in 2016. But this rally in the stock hasn’t reduced the attractiveness of its forward yield, which still stands at 3.15%. For its fiscal 2016 second quarter, Prologis Inc (NYSE:PLD) once again reported better than expected numbers ,in July. However, since it didn’t raise full-year guidance, it prompted several analysts to lower their rating on the stock. This list included, analysts at Credit Suisse Group AG, who on July 20, downgraded it to ‘Neutral’ from ‘Outperform’ while keeping their price target on it unchanged at $48, which at current price represents a potential downside  of 10% in the stock. The popularity of Prologis among funds covered by us saw a notable increase during the second quarter with its ownership among them rising by four to 23 and the aggregate value of their holdings in it shooting up by over $100 million to $590.74 million.

#2. Public Storage (NYSE:PSA)

– Shares Owned by AEW Capital Management (as of June 30): 1.28 Million

– Value of The Holding (as of June  30): $327.95 Million

While AEW Capital Management lowered its holding in Public Storage (NYSE:PSA) by 4% during the second quarter, several hedge funds covered by us initiated a stake in the company during that time. The ownership of Public Storage (NYSE:PSA) among funds tracked by us rose by 10 to 27, while the aggregate value of their holdings in it jumped by $207 million to $1.15 million during the April-June period. Funds that initiated a stake in the company during that quarter included Anand Parekh‘s Alyeska Investment Group and billionaire Jim Simons‘ Renaissance Technologies. Public Storage is the only stock covered in this article which is currently trading in the red for 2016, down 13.15% year-to-date. A large part of the decline that the stock has seen this year has come in the current quarter. Several analysts who track Public Storage think that despite this recent downtrend, the stock is still trading expensively and can see further downside. On September 12, analysts at KeyCorp reiterated their ‘Underweight’ rating on the stock while lowering their price target on it to $205 from $220.

#1. Simon Property Group Inc (NYSE:SPG)

– Shares Owned by AEW Capital Management (as of June 30): 2.65 Million

– Value of The Holding (as of June  30): $575.46 Million

Simon Property Group Inc (NYSE:SPG) continued to remain AEW Capital Management’s top stock pick at the end of June, despite the fund lowering its holding in the company by 2% during the April-June period. Since making its lifetime high at $229.10 in early-August, Simon Property Group Inc (NYSE:SPG)’s stock has corrected quite a bit. Nevertheless, it is still trading up by 8.05% year-to-date. The REIT recently hiked its quarterly dividend by 3.1% to $1.65 per share, which based on its last trading price translates into a forward yield of 3.15%. For its fiscal 2016 third-quarter, analysts are expecting the REIT to report Funds from operations (FFO) of $2.68 per share on revenue $1.35 billion. For the same quarter of the previous year, Simon Property Group had reported FFO of $2.54 per share on revenue of $1.32 billion. At the end of June, there were 21 hedge funds covered by us that were long Simon Property Group with the aggregate value of their holdings in it amounting to $1.08 billion.

Disclosure: None