HALISTER1: 53 REITs Initiated at BTIG; Further Multiple Expansion Unlikely

53 REITs Initiated at BTIG; Further Multiple Expansion Unlikely

(Bloomberg) -- 53 REITs initiated by BTIG analysts James Sullivan, Michael Gorman and Tom Catherwood, who previously worked on Cowen’s REIT team; 21 rated buy, 32 neutral.
  • Multiple expansion in REITs “very unlikely” with Fed’s “strong indications” that rates will likely rise
  • Earnings ests. have fallen as valuations have risen since start of year; movement in FFO multiples “consistent” with declining 10-yr Treasury yields
    • Investors should be “cautious rather than complacent” about impact of higher S-T rates on valuations; that said, sees increases in S-T rates having “minimal impact” on L-T rates
  • Recommends being “very selective"; industrial sector has ‘‘best fundamentals’’ driven by strong secular demand, and ‘‘A’’ malls still ‘‘very attractive’’
    • Notes that BTIG has no buy-rated hotel REITs, though valuations are ‘‘generally attractive”
  • * Buy-rated REITs and price targets: ARE ($124), AVB ($208), DOC ($25), ESS ($260), ESRT ($24), GGP ($35), HPP ($38), HTA ($37), KIM ($34), KRC ($80), KRG ($35), MAC ($97), MORE ($12.25), OFC ($33), PLD ($60), ROIC ($25), SPG (266), SRC ($15), STOR ($35), TRNO ($30), UDR ($42)
  • Neutral-rated REITs: AKR, BXP, CBL, CLI, CPT, DCT, DDR, DEI, DRE, EGP, EQR, EQY, FRT, HCN, HCP, HIW, HR, HST, LHO, LPT, MAA, MPW, NNN, O, OHI, PEB, PGRE, REG, SBRA, SLG, TCO, VTR
    • NOTE: Earlier, DDR cut to underperform from neutral at BofAML
  • NOTE: Aug. 12, REIT Backdrop Favorable for ‘Foreseeable Future’: Raymond James
  • NOTE: Aug. 11, REITs Underperform; Franklin St. Down Post- Offer; Retail Slips
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
AKR US (Acadia Realty Trust)
ARE US (Alexandria Real Estate Equities Inc)
AVB US (AvalonBay Communities Inc)
BXP US (Boston Properties Inc)
CBL US (CBL & Associates Properties Inc)

People
James Sullivan (Cowen & Co LLC)
Michael Gorman (Cowen Group Inc)
Tom Catherwood (Cowen & Co LLC)

Topics
Key Comm. Real Estate News

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