Investors RealEstate Trust should cut its dividend by at least half, and itsstock will have to fall another 30% to reach fair value, activist investor JonathanLitt argued, citing apartment rent declines in the company's energy-sensitiveNorth Dakota markets.
Litt, founder and chief investment officer of , noted in a news release that the company a 10% same-store NOI decline inits most recent fiscal quarter, and indicated in a conference that its dividend may notbe covered by operating income sometime in the future.
Noting declines in the company's energy-exposed markets,Litt said his firm "correctly predicted IRET's potential for substantialdownside" in an April presentation.
The saleof the company's seniors housing portfolio at an 8% capitalization rate,combined with other non-core asset sales, should lead to at least 10% lowerearnings on a run-rate basis, Litt said, adding that he expects a guidance cutfor the 2017 fiscal year in the coming months.
Land & Buildings "remains pessimistic" aboutthe company, he said.