Tuesday, May 19, 2009

REIT Analyst Leaves Bank Of America In Midst Of Most Lucrative Period For Group

Steve Sakwa, whose work product Zero Hedge has not spared its praise for in the past, has left the building. The "top rated" REIT analyst, who gained prominence in the past 2 months for such great work as an upgrade of virtually all companies he covers, has departed for greener, although unknown, pastures. It is quite odd that Sakwa would leave the bank at a time when his group was generating more revenue than virtually any analyst/trading group on Wall Street.

His pastoral style will be missed, if briefly, as he will be replaced by not one, but five REIT analysts that have jumped ship at UBS and are coming to Merrill. Seeing how the banks has generated over $100 million in revenue from REIT underwritings since March 9, it may have even been so generous as to give the UBS team some very sweet guarantees.

Zero Hedge will now focus on his legacy partner, Craig Schmidt, who has been oddly quiet lately with very few companies under coverage left that could get a bump in their price targets.

From Bloomberg:
Steve Sakwa, the top-rated analyst of U.S. real estate investment trusts, left Bank of America Corp. and the lender hired five analysts from UBS AG.

The analysts joining Bank of America include Jeffrey Spector, who was named head of the REIT research team, and James Feldman and Michelle Ko, hired as senior analysts, Bank of America said today in a statement. Lindsay Schroll andAndrew Ryu join as associates. Carrie Gray, a spokeswoman for Bank of America, confirmed Sakwa’s departure in a telephone interview.
“You’re getting a proven commodity that’s able to hit the ground running quickly if that’s what you’re looking for,” said Jeffery Harte, an analyst at Sandler O’Neill & Partners LP in Chicago.

U.S. REITs including SL Green Realty Corp. and Vornado Realty Trust have raised more than $10 billion from share sales this year to pay debt and take advantage of buying opportunities as property prices fall and weaker REITs fail or are forced to sell assets. The 111-member Bloomberg REIT Index is down 13 percent so far this year and commercial property prices fell 21 percent in March from a year earlier, according to Moody’s Investors Service.

Sakwa was named the top analyst in Institutional Investor magazine’s “All-America Research Team.” He estimated in a December report that U.S. REITs would pay out $11 billion in dividends this year and a similar amount in 2008. That’s down from about $13 billion in 2007, according to the National Association of Real Estate Investment Trusts in Washington.
Merrill Lynch

Sakwa worked for Merrill Lynch & Co. when Bank of America, the biggest U.S. lender by assets, bought the securities firm in January. Banc of America Securities-Merrill Lynch Global Research, the unit that hired the UBS REIT team, has hired 12 analysts in the U.S. and another 23 worldwide since January, Bank of America said in today’s statement.

Spector and his UBS team were named among the “runners- up” in the Institutional Investor
All-America Research Team survey last year. Sakwa and his team were named the top analysts. The “second team” went to Citigroup Inc. and the “third team” was Barclays Plc.
Messages left at Sakwa’s Bank of America number and a private number were not immediately returned.

UBS spokeswoman Allison Chin-Leong declined to comment on why the REIT group left the firm. UBS does plan to have coverage of REITs in the future, Chin-Leong said.

Gray declined to comment on Sakwa’s departure beyond confirming it.

Craig Schmidt, senior U.S. REIT analyst at Banc of America Securities-Merrill Lynch since 1995, will report to Spector and remain in his current position, according to today’s Bank of America statement.

hat tip IMA5U
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