Jefferies Reports DCT As Favorite In REIT Sector

Jefferies is maintaining its Underweight rating on the Industrial REIT sector in its quarterly report following the industry's in-line 1Q11 results. The report also highlights DCT Industrial Trust DCT as Jefferies' favorite within the sector. Jefferies maintains a Hold rating and a $5 price target on the stock, of which it says, “We believe DCT trades at the most attractive valuation of the Industrial REITs. The company is recycling capital into stronger markets, which will improve its portfolio quality over the long-term although it will likely impact FFO growth in the near-term. We like the earnings growth prospects of the Global Industrial REITs, AMB and PLD, but both stocks are trading at greater than 50% premiums to their historical FFO multiples. Finally, we are concerned about EGP given its premium valuation on an NAV basis, and its below average forecasted earnings growth.” DCT closed at $5.41 yesterday.