Stifel analysts John Guinee, Aaron Wolf and Joab Dempsey upgraded a number of companies within their coverage universe, noting a macro environment that is changing positively for real estate investment trusts.
The team underlined a number of factors for their revised outlook, including political uncertainty in Italy and Southern Europe, which could lead to lower interest rates and a risk-off investment approach; keen investor interest in hard-asset real estate; and global growth possibly taking a pause while country headline news aggravates ambiguity "and results in global capital finding its way to calmer ports."
"While we are not believers in event driven calls, it is impossible to ignore the potential for public 'bear-hug' M&A offers resulting in a reluctant Board being fiduciarily forced to run a process," the analysts said.
The analysts upgraded office REIT Franklin Street Properties Corp. to "hold" from "sell" and set a per-share target price of $8.00.
In a May 31 note, the analysts noted a number of positives with the company, including industry-leading low general and administrative expenses, a portfolio shift toward higher-growth Sunbelt markets and a still-healthy dividend yield.
The trio upgraded industrial REIT EastGroup Properties Inc. to "buy" from "hold" with a per-share target price of $103.00.
The Stifel analysts noted the company's "very good" balance sheet, improving lease economics and strong fundamentals for data center and industrial properties as some of the positives behind the upgrade.
The team upgraded multifamily REIT UDR Inc. to "buy" from "hold" with a per-share target price of $40.00.
Investment thesis positives include low leverage, robust operating metrics and the company's value-add Developer Capital Program.
The analysts upgraded office REIT Highwoods Properties Inc. to "buy" from "hold" with a per-share target price of $53.00.
The team noted the company's accretive development pipeline, low leverage and focus on high-growth Sunbelt markets as some of the investment thesis positives.
