REITs for the Sky
"Even in an ugly, hideous market I tend to gravitate toward certain sectors," Cramer told his viewers. These have defenses that keep the stock from going too low, he said, adding that in this type of market environment, people need to be conservative.
Takeover bids can make people money hand over fist, he said. The third sector where he sees this as a probability is the real estate investment trust industry.
Right now, commercial real estate companies are being acquired, but since they are not household names, people are not focusing on them, he said. Why are they being acquired? Because it's cheaper for them to buy commercial properties than it is to build them since these properties are in short supply right now, he said.
This sector is also great because of their high dividends, he said.
However, Cramer said he does not like mall REITs, as the premiums paid for them are very low. Instead, he likes office properties.
Two commercial real estate companies he named on Wednesday's show are Equity Office Properties Trust (EOP - news - Cramer's Take) and Vornado Realty Trust (VNO - news - Cramer's Take). While both of these companies are great, Cramer said they are too big to be acquired.
What we need is a small REIT with strong yield and office property in New York, since that's where it's hot right now, he said.
He recommended two: Reckson Associates Realty (RA - news - Cramer's Take) and Brandywine Realty Trust (BDN - news - Cramer's Take), both of which have high yields.
Credit due to the Staff at thestreet.com
