Upgrades
BMO Capital Markets analyst R. Jeremy Metz upgraded self-storage real estate investment trust CubeSmart to "outperform" from "market perform" with a $30-per-share target price and Life Storage Inc. to "market perform" from "underperform" with a $79-per-share target price.
Metz argued in a March 2 note that the net-asset-value discounts in CubeSmart and Life Storage should provide downside support for the stocks, given the companies' attractive and more bite-sized portfolios. The analyst added that the overall self-storage REIT sector has seen increased institutional interest and should stand to gain from the improving economy and steady jobs growth, despite continued supply pressures.
In a separate same-day note, BMO Capital Markets analyst John Kim raised his investment opinions of multifamily REITs Essex Property Trust Inc. to "outperform" from "market perform" and Apartment Investment and Management Co. to "market perform" from "underperform," with respective price targets of $255 per share and $42 per share.
With Essex having the lowest new supply in its markets and highest household income growth among apartment REITs, it is likely to have the second-highest growth in funds from operations per share in 2018 and 2019 in the sector. The company's stock also has declined 7% year-to-date and trades at a 12% discount to NAV, which offers an attractive entry point, Kim said.
For Apartment Investment and Management, Kim said the company's stock appears to trade at a premium adjusted FFO multiple. However, given the company's asset quality, the stock's 16% discount to NAV might be too steep, the analyst said.
Reiteration
Evercore ISI analysts Sheila McGrath and Nathan Crossett reiterated their "outperform" rating on FibraHotel, with a price target on the stock of 15 Mexican pesos.
The analysts posited in a Feb. 28 note that FibraHotel's stock offers a compelling value, with an 11.7% premium dividend yield, and that the company has the highest-quality lodging portfolio among Mexican REITs. The pair also believe the company's recent purchase of the Fiesta Americana Condesa Cancun resort hotel is a natural extension of its growth beyond business hotels.
"Adding this hotel to FIHO's portfolio importantly moves the percentage of development as a percentage of total assets to less than 10% from peak levels of over 20% in 2015," the analysts said.
As of March 1, US$1 was equivalent to 18.84 Mexican pesos.
