Mon, Nov. 7, 8:55 AM
- Retail REITs have dipped 21% since August 1, underperforming the broader REIT market by 600 basis points, says Mizuho's Haendel St. Juste. In addition to the higher interest rates faced by all REITs, the retail names have to deal with soft sales and store closures.
- Mizuho, however, is a fan of "high-quality" portfolios selling at large discounts like Macerich (NYSE:MAC), Taubman (NYSE:TCO), American Assets Trust (NYSE:AAT), and Federal Realty (NYSE:FRT), and upgrades MAC and AAT to Buy from Neutral.
- Upgrading DDR to Neutral from Underperform, St. Juste says there's "compelling" risk-adjusted value despite near-term headwinds, and worries about rising cap rates for lower-quality assets.
- Over the weekend: Barron's: REITs are on sale (Nov. 5)
Sat, Nov. 5, 12:15 PM
- Interest rate fears have helped send REITs tumbling over the past few months, with the Vanguard REIT Index ETF (NYSEARCA:VNQ) down from 15% from its July high, and now yielding 4.3% - more than double that of the S&P 500.
- Source: Barron's Andrew Bary
- Notable REITs at 52-week lows include Equity Residential (NYSE:EQR), Macerich (NYSE:MAC), Simon Property Group (NYSE:SPG), and Public Storage (NYSE:PSA).
- Green Street's Mike Kirby: REITs aren't pound-the-table inexpensive, but on the attractive side of fair value. Citigroup: "While there is undoubtedly deceleration in fundamentals ... the REIT sector is in its best shape from a balance-sheet, portfolio, and operations perspective in its history.”
- Negatives include too much apartment supply in formerly hot markets on the coasts, a flattening in Manhattan office rents, and pressure on malls from the boom in e-commerce.
- Even with all that, Kirby sees the industry's AFFO rising 6.3% this year, and 7% in 2017 and 2018. REITs trade at 20x forward AFFO - pricey vs. the S&P 500, but worth it if they produce better profit growth.
- Another valuation method is to look at the cap rates of portfolio properties, and a check finds REITs like Boston Properties (NYSE:BXP), and Simon Property are selling below their private-market values. Why, asks Kirby, would a pension fund or sovereign wealth fund pay a higher price (lower cap rate) for a Manhattan property when they could get a whole portfolio of NYC office buildings at a cheaper valuation by buying SL Green (NYSE:SLG)?
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Fri, Oct. 21, 4:23 PM
Thu, Aug. 25, 8:12 AM
- Now at BTIG from Cowen & Co., analyst James Sullivan starts coverage of Physicians Realty Trust (NYSE:DOC) with a Buy rating and $42 price target. Growing the portfolio to nearly $3B following the $130M IPO, management has earned a reputation as solid capital allocators in the medical office space. New deals should remain a core driver of the business, resulting in outsized earnings growth next year.
- STORE Capital (NYSE:STOR) is initiated at Buy with a $35 price target, with Sullivan taking note of the company's combination of the smallest portfolio, differentiated acquisition strategy, and management track record.
- A West Coast focus and management's ability to source new investments should deliver excess returns to investors, says Sullivan, starting Retail Opportunity (NASDAQ:ROIC) with a Buy and $25 price target.
- Kilroy Realty (NYSE:KRC) has upside from the below-market rents in its portfolio and an extension into life science real estate. He starts it at Buy with $80 price target.
- Terreno Realty (NYSE:TRNO), Corporate Office Properties (NYSE:OFC), Macerich (NYSE:MAC), Kimco (NYSE:KIM) remain Buys.
- A Buy at Cowen, Duke Realty (NYSE:DRE) is stared with just a Neutral at BTIG.
- Previously: BTIG launches REIT sector coverage (Aug. 25)
Thu, Aug. 11, 9:45 AM
- Macy's is higher by 16% after reporting its Q2 and announcing the closing of 100 full-line stores (out of 675 total).
- The news is sending a shudder through the owners of malls: Simon Property (SPG -1.6%), General Growth (GGP -2.1%), Brixmor (BRX -2.1%), Weingarten Realty (WRI -0.8%), Macerich (MAC -0.7%), Taubman Centers (TCO -0.8%), PREIT (PEI -1.3%).
Mon, Aug. 1, 7:03 AM
Sun, Jul. 31, 5:30 PM
Fri, Jul. 22, 4:41 PM
Tue, Jul. 5, 1:10 PM
- "The mood among landlords was upbeat, as leasing trends have been strong for well-located stabilized assets as well as the REIT-sponsored redevelopment projects we saw," says Citi's Michael Bilerman after visiting with Equity One (NYSE:EQY), Federal Realty (NYSE:FRT), Kimco (NYSE:KIM), Macerich (NYSE:MAC), Regency Centers (NYSE:REG), and Taubman Centers (NYSE:TCO) over three days last week.
- High barriers to entry have resulted in low supply growth and continued densification of existing assets, he says.
- With competition for assets strong and cap rates low, the primary way for REITs to invest on the West Coast has been through redevelopment of existing assets. In general, he says, REITs have been able to achieve solid returns doing this.
Thu, Jun. 9, 11:52 AM
- The team hosted meetings with 29 companies over two days across six subsectors. Some highlights:
- Lodging: Business travel remains soft and most are operating defensively by grouping up and reducing leverage. NYC is flooded with hotels available for sale which should pressure pricing.
- Apartments: The slowdown in NoCal is concentrated in Soma and San Jose, but expected to be temporary. The NYC slowdown is expected to endure through 2017. Merchant builders in Houston with deliveries in 2017 are in trouble - an opportunity for Camden Property Trust (NYSE:CPT) to pick up assets on the cheap.
- Malls: Concerns over department stores are overblown. Simon Property (NYSE:SPG) expects spreads to top mid-teens in the next five years. Omni-channel retail strategy is growing increasingly important as the WSJ reports 80% of online sales touch brick and mortar in some way.
- CS's Ian Weissman is ranked #1,134 out of #3,990 analysts on TipRanks.com.
- Tickers of interest: HPT, SHO, LHO, PEB, CHSP, INN, RLJ, EQR, AVB, ESS, PPS, UDR, AIV, GGP, BRX, KIM, WRI, MAC
Tue, May 17, 11:02 AM
- Following up on yesterday's story about the divergence between the stock prices of major retailers (down) and those of their landlords (up), Bloomberg's Rani Molla and Shelly Banjo break down the numbers further.
- They find those REITs with a large portion of portfolios concentrated in malls are down 10% Y/Y vs. all REITs, which are higher by 6%. Going further, they find those REITs with exposure to higher-end malls and outlet centers - Simon Property Group (NYSE:SPG) and Tanger Factory (NYSEMKT:SKY) come to mind – have been spared, while those owning older malls have taken the hit. CBL & Associates (NYSE:CBL) and WP Glimcher (NYSE:WPG) are down 40% and 30% this year, respectively.
- It's easy to pick on mall owners, but a broad slowdown at brick-and-mortar stores is ultimately a threat to all retail landlords, as traffic across all types of retail real estate in the U.S. and Canada has fallen as much as 18% Y/Y.
- On the good side is low supply as developers have stopped building, but even that's begun to run its course, they write.
- REITs of interest: O, NNN, GGP, KIM, WRI, MAC, TCO, PEI, SKT, TCO, ROIC, RPAI, IRC, FRT, DDR, WHLR, EQY, KRG, REG
Mon, May 16, 9:39 AM
- The retail sector has made a lot of headlines of late with a series of poor earnings and forward guidance reports ... and the stock prices of retailers have subsequently been marked down.
- It's created a sizable divergence with the stock prices of the landlords who depend on a steady stream of rising rents from those retailers, notes Marketfield Asset Management's Michael Shaoul.
- via Bloomberg
- REITs of interest: O, NNN, SPG, GGP, KIM, WRI, MAC, TCO, PEI, SKT, TCO
Tue, May 3, 4:21 PM
- Q1 FFO of $141M or $0.87 per share vs. $133.5M and $0.79 one year ago.
- Mall tenant sales per square foot of $625 up from $607 in Q1 last year. Occupancy of 95.1% down 30 basis points.
- Company sold Capitola Mall in mid-April for $93M.
- Accelerated share buyback program completed on April 19 - company repurchased 5.08M shares between Feb. 18 and Apr. 19, after buying 5.11M shares from Nov. 13 to Jan. 19.
- Full-year FFO per share guidance of $4.05-$4.15 is affirmed.
- Conference call tomorrow at 1:30 ET
- Previously: Macerich beats by $0.01, misses on revenue (May 3)
- MAC flat after hours
Tue, May 3, 4:11 PM
- Macerich (NYSE:MAC): Q1 FFO of $0.87 beats by $0.01.
- Revenue of $256M (-19.6% Y/Y) misses by $26.21M.