New York REITs show declines in third quarter

By Sara Polsky | October 31, 2008 02:08PM

Several third-quarter earnings reports released this week show just how much lower share prices and incomes are at a number of major New York-based REITs compared to last year at the same time.

Boston Properties reported a nearly $200 million decline in net income, from $242.4 million at the end of the third quarter in 2007 to $48.5 million as of September 30 this year. The share price declined from $1.17 to $1.15.

Jay Sugarman, chairman and CEO of iStar Financial, a mortgage REIT, said that iStar’s earnings in the third quarter were “well below expectations” and that non-performing loans are a problem. The company reported an adjusted loss of $2.15 per share this third quarter, compared to adjusted earnings of $1.07 last year. The company had a $305.8 million net income loss, compared to last year’s positive net income of $93 million.

Meanwhile, Capital Trust’s net income decreased by $1.8 million year-over-year, and its share price dropped from $0.87 to $0.61. The company attributed both drops to a lower amount of interest earned compared to the amount of interest paid out to the company’s lenders.

LaSalle Hotel Properties had a net income of $12.5 million for third quarter 2008, down from $20.2 million in 2007. The net income takes into account $4.3 million spent to reach a settlement agreement after six years of litigation with Meridien, a hotel chain.

SL Green Realty Corporation, meanwhile, had a lower net income in the third quarter this year — $33.6 million compared to $98.6 million for the third quarter of 2007. But the company reported a 16 percent increase in funds from operations available to stockholders.

And Annaly Capital Management was an exception to the downward trend. The company, which buys Fannie Mae and Freddie Mac securities, posted a net income for this year’s third quarter of $302.1 million, or $0.55 per share, compared to $108.3 million, or $0.33 per share, in third quarter 2007. The company’s chairman, CEO, and president, Michael Farrell, said that the tightened credit markets and falling home prices that mark the economic crisis will be “fundamentally positive for our strategy.”

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