Jefferies Initiates AMB Property At Hold (AMB)

Jefferies & Co. is initiating coverage on shares of AMB Property

with a Hold rating and a $28 price target. In a note to clients, Jefferies writes, "We are initiating coverage of the Industrial REIT sector with a Neutral view over the next 12 months. It appears that U.S. industrial fundamentals are in the process of bottoming, as evidenced by improving leasing velocities and stabilizing occupancies of the Industrial REITs. Also, the economy is in recovery mode which should help drive industrial demand; however, we are concerned that the economy may not recover as rapidly as Industrial REIT valuations seem to suggest. Furthermore, we worry that supply may begin to rebound meaningfully as it did in 2006 and 2007, which could keep rental rates down and mute the effects of the economic recovery on industrial fundamentals. We note that PLD and AMB are already discussing ramping up developments and have guided to development starts in 2011 of up to $1 billion and $700 million, respectively, which compares to minimal development starts over the past two years." Shares of AMB gained 49 cents yesterday to close at $31.55.