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Wednesday, North American real estate edition

Gauging Supply Chain Risk In Volatile Times

The Commercial Real Estate (CRE) Sector Feels the Impact of the Coronavirus

Credit Analytics Case Study Poundworld Retail Ltd

Segment

IFRS 9 Impairment How It Impacts Your Corporation And How We Can Help


Wednesday, North American real estate edition

Initiation

Jefferies analysts George Hoglund and Omotayo Okusanya launchedcoverage of Agree Realty Corp.with a "buy" rating, citing its "robust" growth amid a "slowgrowth" sector. They set their price target on the company's stock at $45,which is dividend discount model-derived.

Hoglund and Okusanya said in an April 21 note that Agree Realtyhas seen rapid growth via acquisitionsin the past years, resulting in a "solidly" increasing dividendand greater portfolio diversification. "We think continued portfolio growthwhile maintaining low leverage and improving access to capital will drive multipleexpansion[s] and narrow the valuation gap to peers," the analysts said.

Citing the company's "attractive" valuation relativeto its peers, generally healthy roster of investment-grade tenants, "solid"balance sheet, an 11.4-year average remaining lease term coupled with a well-staggeredlease maturity schedule, "robust" investment opportunities, and declininggeneral and administrative expenses as a percentage of revenues, the pair addedthat they consider the company an attractive option for investors in the retailnet-lease segment.

Downgrade

Citing near-term concerns about the company's class A portfolioconcentration and the risk of new supply, a pair of Evercore ISI analysts downgradedEquity Residential to "hold"from "buy" and lowered their price target on the company's stock to $76from $80.

Steve Sakwa and Rich Hightower said in a note that while EquityResidential's first-quarter resultsare "generally in line," they are now "more acutely concerned"about supply risk in the company's key markets after a further top-line slowdownin the company's same-store portfolio in New York City and San Francisco.

The duo added that they are "concerned that the portfoliolacks any meaningful 'cushion' in the form of lower-price-point and/or suburbanexposure — at least in the near- to medium-term," given the company's urban,class A portfolio concentration after its recent property salesto Starwood Capital Group.

Upgrade

A group of Stifel analysts upgraded Liberty Property Trust to "hold" from "sell,"saying in a note that the company's "attractive" net industrial valuationoffsets their concerns about execution risk.

In addition to Liberty's attractive real-estate valuation metrics,the analysts said the upgrade is also based on the company's "solid" balancesheet and development-oriented platform, as well as their expectations for the REITto see attractive FFO/FAD per share multiples in 2017 and for industrial fundamentalsacross the U.S. to remain strong.

The analysts cited "modest" execution risk, Liberty'slong history of earnings and value erosion at a fixed cap and $341 million landbank, which they said accounts for a very high 3.8% of total enterprise value, asnegatives.