Seeking a Winning REIT?
Look for a Stock Split

NEW YORK -- Real-estate investment trusts that do stock splits tend to outperform their peers by about 4.4% during the 12 months following the split, according to Banc of America Securities analyst Ross Nussbaum.

Historical data show REIT stocks that have been split in the last 10 years have outperformed the Morgan Stanley REIT index by an average of 2%, 0.5% and 4.4% over the three-, six- and 12-month periods following the split, Mr. Nussbaum wrote in a research note.

Stock splits don't increase the value of a company, but merely divide the value over a greater number of shares. Therefore, they should not trigger an increase in the value of the stock overall. But by reducing the price of the shares, stock splits can make them appealing to a broader range of investors.

One of the biggest outperformers was Chelsea Property Group, whose stock outperformed the Morgan Stanley REIT index by 39.2% in the 12 months following its 2-for-1 stock split in May 2002, Mr. Nussbaum said. (Chelsea was acquired by Simon Property Group Inc. in October 2004).

Mr. Nussbaum identified a list of 17 REITs he sees as likely candidates for a stock split within the next year, based on the criteria that their shares are trading for more than $50.

The top five are Essex Property Trust Inc., CBL & Associates Properties Inc., Vornado Realty Trust, AvalonBay Communities Inc. and Alexandria Real Estate Equities Inc..

Rounding out the list are Simon Property Group Inc., Boston Properties Inc., Macerich Co., Pan Pacific Retail Properties Inc., Mills Corp., Kimco Realty Corp., SL Green Realty Corp., Public Storage Inc., Regency Centers Corp., Federal Realty Investment Trust, Parkway Properties Inc., and Camden Property Trust.

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