Equity Residential (EQR), Apartment Investment and Management Co. (AIV), BRE Properties Inc (BRE): Playing the Demise of the American Dream

A niche operator

BRE Properties Inc (NYSE:BRE) has a portfolio of 74 multi-family communities, with 21,160 units in California and Washington state. The REIT also has joint venture interests in eight apartment communities with 2,864 units.

BRE Properties Inc (NYSE:BRE) is also looking to get rid of under-performing assets. In 2012, it sold off six properties for $115 million, and expects to sell another $150 million worth of properties in 2013.

The real problem with BRE Properties Inc (NYSE:BRE) is that its key markets are not seeing as strong a performance as the likes of Equity Residential (NYSE:EQR). The company has around 60% of its units located in Southern California. Specifically, its Orange County markets are seeing weak results.

The big news of late for BRE is a the potential buyout by Land & Buildings. The company is offering to buy up BRE Properties Inc (NYSE:BRE) for about $4.6 billion, or $60 per share; this is more than 15% above current trading levels. However, BRE Properties Inc (NYSE:BRE) management is of the opinion that it’s better off independent.

Bottom line

Even as the mortgage-financing market rebounds, there will likely remain a glut of Gen-Y’ers that continue to rent. One of the big strengths of all these apartment operators is their dividends. Equity Residential (NYSE:EQR) has a dividend yield that’s more than 40 basis points above its top peers…

What’s more is that Equity Residential (NYSE:EQR) also trades the cheapest…

I like Equity Residential the best given its superior dividend and valuation, not to mention the fact that its properties are located in some of the top rental markets in the U.S., where renting makes more sense than buying, i.e. New York City and Washington, D.C.

The article Playing the Demise of the American Dream originally appeared on Fool.com and is written by Marshall Hargrave.

Marshall Hargrave has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Marshall is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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