There’s not much I like more than a high-yielding REIT. I’ve been accumulating positions in REITs like American Capital Agency Corp. (NASDAQ:AGNC) and Chimera Investment Corporation (NYSE:CIM), both of which have yields over 17 percent, for months. But some of their competitors are showing worrying signs. Among them? The Macerich Company (NYSE:MAC) and AvalonBay Communities, Inc. (NYSE:AVB).
Despite yielding 4.6 percent, Macerich-investors have taken some confidence-crumbling potshots in recent days as insiders at the company have started shedding shares. Chairman and CEP Arthur Coppola sold 252,275 shares on Sept. 2 and Sept. 3 for $11 million, according to Barron’s. That was the biggest one-man orgy of insider selling at the company in the past six years. Macerich’s CFO, Thomas E. O’Hern, joined in the fun, too, dropping 9,500 shares on Sept. 2 (good for $410,000).
Why now? Two obvious reasons: 1) The company lowered their dividend in May to 50 cents; and 2) the stock’s up 19+ percent year-to-date. What’s not obvious is what they see in the stock’s future that made them pick early September for a sale. Are they feeling weakness in the housing markets? Or are they anticipating another dividend drop? Who knows, but it looks like they’re not alone.
“In general in the last week or so there’s been increased selling at REITs,” Ben Silverman, research director at InsiderScore.com, told Barron’s.
They were joined by AvalonBay, where insiders (including the company president, Timothy J. Naughton) have sold $10.5 million in stocks over the past month. Selling AVB seems to make a bit more sense to me. The stock’s up 62 percent in the past 12 months, and it’s above the share price it hit in the months before the Great Recession took hold.
Insider selling’s difficult to interpret, but it’s hard to argue that company honchos sell when they’re expecting big gains and good news in the coming months.
