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Dear Mr. Berko:

Dear A.S.:

Colonial Properties Trust (CLP-$19) owns and manages retail, residential, office and multifamily properties located in the Sun Belt states. Funds from operations, an important indicator for REITs, rose 60 percent in the second quarter, though it fell a middling $700,000 behind this year’s first quarter. But net income for the first six months of this year was up about 1.2 percent over 2007, a positive sign in a challenging market. Lehman Bros. doesn’t like the stock, BB&T Capital Markets likes it, and Oppenheimer is neutral. Wall Street’s consensus indicates CLP has a high target price of $26 and a low target of $18 during the next 12 months. It seems there’s more upside potential, probably because of the $2 dividend, which yields a sweet 10.5 percent. So I’d buy 500 shares.

Cousins Properties Inc. (CUZ-$23.70) owns and manages offices, multifamily, retail and industrial properties in Texas, Florida, Georgia and Tennessee. CUZ also holds land for sale for commercial and residential development and provides leasing and management services to third parties. Management recently reported funds from operations for the first six months of 2008 of 58 cents a share vs. 63 cents for 2007, certainly a plus in this difficult market. There are no current advisories offered on Wall Street, but analysts believe earnings for 2009 should be around $1.20 a share. Some observers suspect CUZ has an eye on distressed residential projects in the Atlanta perimeter, which could bode well for good earnings in 2010 and 2011. The $1.48 dividend yielding 6.2 percent looks safe. I’m comfortable with 500 shares.

Duke Realty Corp. (DRE-$25.51) owns office, industrial, medical office and retail properties in 22 major U.S. cities. Net income for DRE’s first six months in 2008 fell more than 50 percent from last year, and the company failed to meet Wall Street’s expectations. DRE owns a lot of real estate in Arizona, Florida, Texas and Georgia, where the market has been harsh. Deutsche Securities and Credit Suisse recently downgraded the stock. Earnings for 2009 are likely to be in the neighborhood of $2.40 per share, down from expected 2008 earnings of $2.60 a share. The $1.94 dividend, which might be raised this year, yields a nice 7.6 percent. I wouldn’t buy 500 shares, but if you can afford the gamble, go for 250 shares.

Lexington Realty Trust (LXP-$15) owns and manages office, industrial and retail properties net-leased to major corporations throughout the United States. LXP also provides investment advisory and asset management services to net-lease property investors. LXP reported that its consolidated portfolio was 94.1 percent leased for the past six months and that 2008 funds from operations will come in between $1.56 and $1.64 per share. Wall Street doesn’t seem well disposed towards LXP, and Lehman Bros. recently rated the stock as a “hold.” The consensus for 2009 is that earnings will trend lower, and there’s a small possibility management might reduce the $1.32 dividend. I don’t sense a compelling reason to own LXP, so I’d take a pass on this one.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net. © Copley News Service