UPDATE: Stifel Downgrades Corporate Office Properties Trust on Multiple Negative Factors
In a report published Tuesday, Stifel analyst John Guinee downgraded the rating on Corporate Office Properties Trust (NYSE: OFC) from Buy to Hold, and removed the $31.00 price target.
In the report, Stifel noted, “We are downgrading Corporate Office Property Trust from Buy to Hold as we think 1) reducing the portfolio from the current 210 asset portfolio to the 173 asset core portfolio in late 2014 will, by our estimates, be NAV destructive, 2) ongoing sequestration budget cuts appear to be continuing, which should continue to impact Department of Defense spending, 3) we are very nervous about the ability of OFC (or any D.C. focused office owner) to backfill their commodity vacancy, 4) while we think the development pipeline is real, returns nationally are tightening, 5) the 2.3 and 3.5 year lease terms for 3Q13 and YTD 2013 implies continued leasing challenges, 6) the $350mm land bank still equates to 20.4mm SF of developable office space, or 130% of the 15.6mm SF core office portfolio, and 7) the TEV/SF of $218, a 15% premium to our $189/SF estimate for adjusted replacement cost, is expensive.”
Corporate Office Properties Trust closed on Monday at $24.72.
© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.