On Sunday, December 8, the 40 day underwriter quiet period following the October 29th IPO of Brixmor Property Group Inc (BRX) will expire, thereby permitting the underwriters of the IPO to release positive research reports on the grocery-anchored shopping center REIT. This event is likely to provide the stock with at least a temporary boost in price.
Since pricing at the midpoint of its expected range at $20 per share, BRX has scarcely moved, fluctuating between $19.38 and $20.99 per share; the stock closed at $20.18 on November 29.
The extensive list of underwriters, including BofA Merrill Lynch, Citi, J.P. Morgan, Wells Fargo Securities, Barclays, Deutsche Bank, RBC Capital Markets, UBS Investment Bank, Blackstone Capital Markets, Baird, Evercore Partners, KeyBanc Capital Markets, Mitsubishi UFJ Securities, PNC Capital Markets, Sandler O'Neill, Stifel, and Suntrust Robinson Humphrey, will try to inject life into the stock with the release of positive detailed reports about the company to the investment community.
Over the course of the past two years, our research and several relevant academic studies have suggested a positive relationship between the number of underwriters and quality of their reputations and a rise in stock price towards the close of the quiet period.
The rise in price typically begins a few days before underwriter research reports have been published, as savvy investors realize that the underwriters will release exclusively fairly positive information-the underwriters would have little incentive to do otherwise-and begin to purchase shares in anticipation of the quiet period expiration, increasing perceived demand for the stock.
Brixmor is a REIT that operates 522 grocery-anchored shopping centers (the firm also owns all of the centers except for one) comprising some 87 million square feet of leasable floor space. Over 70% of BRX's centers feature market-leading grocers. The firm's tenants include Publix Super Markets, Inc., The Kroger Co. (KR), The TJX Companies, Inc. (TJX) and Wal-Mart Stores, Inc. (WMT).
BRX faces competition from similar shopping center owners and operators, some of which are better capitalized than BRX. Major competitors include Regency Centers Corp (REG), Phillips-Edison ARC, and Garrison Investment Group.
The REIT's efforts to improve its facilities with massive capital investments seems to have produced results, as the firm has continued to post good cash flow.
Aggressive investors should consider this quiet period expiration as a possible short term buying opportunity.