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Friday, North America real estate edition

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Six trends shaping the industries and sectors we cover in 2021

Six trends shaping the industries and sectors we cover in 2021

Capital Markets View – January 2021


Friday, North America real estate edition

Initiations

Barclaysinitiated coverage of Kite RealtyGroup Trust at "overweight" with a 12-month price target of$33.

Withthe company producing "reasonable" organic gains and its development andredevelopment activities, analysts Linda Tsai and Ross Smotrich see Kite generating4.1% year-over-year FFO-per-share growth in the near term. They expect the company'spricing power to improve over the longer term in the wake of stabilized redevelopmentsand full occupancy, according to a July 22 report.

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Janneyassigned EPR Propertiesa "buy" rating in initiating coverage of the company. Analysts RobertStevenson, Venkat Kommineni and Hersh Shintre have an $88 fair value estimateon the stock, which they said implies about 9% upside.

"We see upside to EPR's stock price given (1) its assetsfit well with the millennial's desire to spend more on "experiences";(2) a reasonable valuation from both an NAV and multiple perspective (plus a 4.7%dividend yield); and (3) historical outperformance relative to REITs overall (aswell as the triple-net peer group) in rising interest rate environments," theysaid in a July 21 report.

The teamcited tenant issues, including outsize exposure to AMC, as among risks facing thecompany.

Upgrades/Downgrade

MizuhoSecurities USA Inc. upgraded HudsonPacific Properties Inc. to "buy" from "neutral"and downgraded Brandywine Realty Trustto "neutral" from "buy."

AnalystRichard Anderson said Hudson Pacific continues to trade at a roughly 12.5% discountto his NAV estimate of $36.85. Among other factors playing in the company's favor,he said he sees the "moderating" tech industry coming to a soft landingrather than a repeat of 2001's bubble burst.

Anderson also continues to favor West Los Angeles-focused "Today'supgrade reinforces our overall positive call on LA, and we view owning DEI and HPPas an interesting way to diversify in West Coast office," he said.

Anderson said his downgrade of Brandywine is largely a valuationcall, "plain and simple."