Dear Mr. Berko: My Merrill Lynch broker and I would like your opinion on the following real estate investment trusts. Colonial Properties, Cousins Properties, Duke Realty and Lexington Realty Trust. I would buy 500 shares of each because we feel that within the coming 18 months some of the REITs will begin coming back and we have chosen these four issues. Please let us know what your thoughts are. — A.S., Oklahoma City

Dear A.S.: I’m always happy, willing and eager to personally assist a Merrill Lynch broker and client. However, I’m sure that John Thain, the CEO of that fine firm, would feel personally honored if you would ask for his opinion too.

Colonial Properties Trust (CLP-$18.88) owns and manages retail, residential, office and multi-family properties located in the Sunbelt states from Virginia to Nevada. Funds from operations, an important indicator for REITs rose 60 percent in the second quarter, though 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 very challenging market. Lehman doesn’t like the stock, BB&T Capital Markets likes CLP 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 the $2 dividend that yields a sweet 10.1 percent looks safe. So I’d buy 500 shares.

Cousins Properties Inc. (CUZ-$24.71) 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. CUZ, headquartered in Atlanta, has been in the real estate business for more than 50 years. Management recently reported six months funds from operations for 2008 of 58 cents a share vs. 63 cents for 2007; certainly a plus in this difficult market. There are no current “buy, sell” or “hold” options offered on Wall Street, though analysts believe earnings for 2009 should be around $1.20 a share. Some observers suspect CUZ's 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 percent looks safe. I’m comfortable with 500 shares.

Duke Realty Corp. (DRE-$24.24) owns office, industrial, medical office and retail properties in 22 major U.S. cities. Net income for the DRE’s first 6 months fell better 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 and may be a long time recovering. Deutsche Securities and Credit Suisse recently downgraded the stock. Earnings for 2009 are likely to be in the neighborhood of $2.40, down from expected 2008 earnings of $2.60 a share. The $1.94 dividend, which might be raised this year, yields a nice 7.9 percent. I wouldn’t buy 500 shares. However, there is some talk that makes DRE an interesting issue. If you can afford the gamble then go for 250 shares.

Lexington Realty Trust (LXP-$14.24) 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 last six months and that funds from operations for the entire year through December of 2008 would 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 by a few pennies. 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, FL 33429 or e-mail him at malber@comcast.net. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

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