David BaskinAvalonbay CommunitiesAVBDON'T BUYJan 09, 2014

If rates go up too much, in effect you are affecting the consumer who doesn’t have a lot of debt, and affecting their ability to buy houses and spend money. This will probably mean more renting than ownership. If there is more renting, you are probably going to see an increase in occupancy in rents for apartment owners like this company. You have to be careful of excess supply. He thinks this company has a pretty good development pipeline and should be able to offset some of that increase supply.

(A Top Pick April 4/13. Up 0.65%.) Owns, operates and develops apartment communities in the US. Apartment assets have done well from a free cash flow perspective, but unfortunately, they face the headwinds of increased supply as well as the fear from many investors that people that are renting are going to start moving into single-family homes. From his perspective, this is one of the highest quality apartment owners in the US. Have a large development pipeline which is going to differentiate themselves from their peers and will allow them to deliver above average free cash flow growth going forward.

(A Top Pick April 4/13. Up 4.97%.) Has really held up well in the face of a strong downturn in the REIT sector. Have a very strong capital structure, low leverage and no need for capital but are going to be able to generate very strong double digit free cash growth. Did a very large acquisition in the US and as they integrate that, free cash flow will grow even further. They operate with a 70% payout ratio.

Owner/operator/developer of apartment buildings in coastal areas of US. Class ‘A’ apartments buildings. 5% discount to NAV compared to 10-15% premium in the past. Will generate strong free cash flow growth and he sees a distribution increase.

Premier apartments, basically on the West Coast but also on the East Coast. Traded off recently because they partnered with Equity Residential (EQR-N) to buy Archstone. Likes quite a bit but the stock has suffered because people are anticipating they are coming to market to sell shares. This is an opportunity to buy a name with an NAV of $130-$135. Have been able to grow their cash flow dramatically.