It's been a tough first year as a public company for southeast U.S. apartment owner Trade Street Residential (TSRE), but analyst Ryan Gilbert says the company is set for fast AFFO growth driven by the stabilization of its newly acquired portfolio of apartment properties with mid-6% yields and 60% NOI margins (vs. TSRE's current 53.5%).
Past the rights offering and management transition, the only headwind left is the Class A preferred repurchase which should be completed this year.
"The natural catalyst for TSRE will be demonstrating the strength of the leaseup portfolio through AFFO and NOI margin growth. Other near term catalysts include the Class A repurchase, the disposal of land held for sale, and capital recycling into new properties from non-core properties."
He starts the stock with a Buy and $8.50 price target.