Halister News

(Bloomberg) -- Bluerock Residential drops as much as 5.4% to the lowest intraday since April 2016 after it was downgraded to neutral from buy (PT to $11 from $16.50) at Compass Point following the REIT’s decision to internalize management and review its dividend policy.

• BRG could cut its dividend in half, which would save ~$14.5m, Compass Point analyst Steve Shaw wrote in a note
• Investors should view BRG as a stock that yields 5.2% instead of the current yield of 10.3%; multifamily and small-cap REIT peers have ~3.5% and ~6.0% dividend yields, respectively
• While BRG’s growth trajectory should stay intact, it’s likely going to be a "long claw back to gain investors’ confidence"
• BRG has 5 buys, 1 hold, 0 sells, average PT $14: Bloomberg data
• NOTE: BRG is scheduled to report 2Q results pre-market Tuesday and host conference call at 11am
• NOTE: June 27, Compass Point said it favored BRG given its trading discount

To contact the reporter on this story: Lily Katz in New York at lkatz31@bloomberg.net To contact the editors responsible for this story: Arie Shapira at ashapira3@bloomberg.net Will Daley