KeyBanc bullish on apartment REITs, AVB and UDR in particular

|By:, SA News Editor

KeyBanc makes some moves in the apartment REIT sector, boosting AvalonBay (AVB) and UDR to Buy with price targets of $139 and $29, respectively. Essex Property Trust (ESS) loses its Buy rating.

The sector as a whole is boosted to a Buy, "based upon attractive valuation levels that overlook the potential for accelerating fundamentals, as the impact of new supply wanes and continued employment gains support greater rental demand into '15," says analyst Karin Ford.

"We are incrementally constructive on East Coast exposure; our upgrade of AVB is consistent with this notion ... Declining supply in UDR's markets should support fundamental outperformance for the Co.'s portfolio going forward."

"While we continue to see West Coast fundamentals as favorable, we believe ESS largely prices that in, particularly following its bullish Investor Day, which highlighted a strong 3-yr. growth plan. Additionally, the potential acquisition of BRE could be an overhang for the stock."