BMO, BTIG reiterate ratings on SL Green; BTIG keeps Prologis at buy

Reiterations

- BMO Capital Markets analyst John Kim reiterated the "outperform" rating on office REIT SL Green Realty Corp., with a price target of $32.

The sale of a 49.9% stake in 245 Park Ave. "adds confidence in the [New York City] transaction market and [SL Green's] execution track record," which should favorably impact its multiple, the analyst said. The joint venture sale exceeded the analyst's expected 7.5% discount and resulted in an upward revision of SL Green's estimated base case value for its six largest assets to $39.65 per share.

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- BTIG analysts Thomas Catherwood and John Nickodemus reiterated the "buy" rating for SL Green Realty with a lower price target of $70.

The sale of the stake in 245 Park Ave. at a $2.0 billion gross valuation is seen as a significant milestone as it addresses roughly half of asset sales planned for 2023, and more than covers the REIT's share of redevelopment cost at the property, among other things, Catherwood and Nickodemus said. The analysts believe that the office REIT is well-positioned to complete planned asset sales and debt repayments in 2023, and that higher asset management fees could provide an upward bias to consensus estimates for 2024.

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- BTIG analysts Thomas Catherwood and John Nickodemus reiterated the "buy" rating for Prologis Inc. with a price target of $152.

The acquisition of a $3.1 billion industrial portfolio from Blackstone Inc. is seen as a positive for both Prologis and the industrial sector overall, the analysts said. The transaction is expected to bring more sellers to market, especially institutional investors with closed-end funds, which could benefit Prologis. The industrial REIT is expected to remain an active acquirer, the analysts said in a June 27 note.

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- Mizuho Securities analyst Haendel St. Juste and Barry Luo reiterated the "buy" rating for Apartment Income REIT Corp.. In a June 28 research note, the analysts maintained a price target of $40.

The level of the company's underperformance is unwarranted despite concerns about its core deceleration and slight increase in leverage, the analysts said. Apartment Income trades at the deepest discount in the space, suggesting these risks are more than priced in, St. Juste and Luo said, adding that they see the stock as well positioned to play offense and defense.

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- Janney Montgomery Scott LLC analysts Robert Stevenson, Steve Dumanski and Kyle Katorincek reiterated their "buy" rating for NNN REIT Inc. with a price target of $42.14.

The analysts believe the REIT can outperform as interest rate increases begin to dissipate, on the back of the company's solid risk-adjusted growth and a strong balance sheet with little near-term maturities. The analysts expect the company to continue outperforming over the next few years, even if the US economy weakens.