Plum Creek Timber Competition
Now Viewing Plum Creek Timber's competition in: Real Estate Investment Trusts (REITs) (primary)
Call Preparation Questions
Customers, Marketing, Pricing, Competition
How does the company market its properties? - Some hire brokerage firms, while others organize their own marketing efforts.
What industry sectors is the REIT exposed to? - REITs can concentrate on retail, office, multifamily residential, hotel, and industrial sectors, exposing them to the risks of those industry sectors.
What types of tenants does the company try to attract? - REITs that own shopping malls, in particular, want well-known retailers that can serve as anchor tenants.
How have vacancy rates and rents changed in the company's properties in the past year? - Vacancy rates, which determine revenues, vary for office, industrial, and apartment properties.
What are typical lease terms? - Office, industrial, and retail leases typically last 5 to 10 years.
Have shifting demographics affected demand for the company's properties? - A slow economy and higher unemployment can dampen demand for office space.
Competitive Landscape
The health of the economy drives demand for REITs as investment vehicles. Profitability depends on the value of the properties in the portfolio, which in turn highly depends on real estate vacancy rates. Large companies have advantages in deal-making, and economies of scale in marketing, computer and infrastructure investment, and operations. Smaller companies can compete by specializing not only in real estate type, but by geography, though geographic focus can increase risks.
Full Industry Overview For Real Estate Investment Trusts (REITs)
Business Challenges
CRITICAL ISSUES
Maturing Debt of Commercial Properties - Many REITs became overleveraged during the last decade. Typically, REITs cannot grow without taking on debt since they pay out a majority of their earnings. The real estate market crash of 2008-2009 uncovered REITs with invested properties under tremendous debt due to declining property values. Over $1.5 trillion in commercial real estate loans will come due between 2009 and 2013, a substantial portion of which could result in default, according to Goldman Sachs.
Vulnerability to Cyclical Economic Conditions - The value of real estate is notoriously cyclical, varying with the strength of the regional or national economy. Vacancy rates for properties can climb rapidly, especially for office buildings and warehouses, if the economy falters. For example, the vacancy rate for office space in large markets like San Jose, California, rose to 25 percent during the late 2000s recession. Rents can also fall rapidly in economically impacted markets; office rents can fall 5 percent or more in a single year.
Industries Where Plum Creek Timber Competes
- Real Estate
- Real Estate Investment Trusts (REITs)
- Land REITs(primary)
- Residential Real Estate Development
- Real Estate Investment Trusts (REITs)
- Construction
- Construction Materials
