8 Reasons Corporate Office Properties Trust Could Be Dead In The Water
Corporate Office Properties Trust (NYSE: OFC) announced its second quarter financial results on Tuesday morning. After the report, Stifel analysts John Guinee, Erin Aslakson and Kyle McGrady downgraded the stock’s rating to Sell from Hold on the back of eight reasons:
1) The company’s strategy for asset acquisition and disposition is troublesome.
2) Amidst a weak leasing environment and feeble market conditions outside of Columbia Gateway and National Business Park, the analysts are “concerned that the OFC strategic niche is long in the tooth.”
3) “Stubborn vacancy in the secondary defense industry submarkets will likely remain stubborn.”
4) The 400k square-feet, 13200 Woodland Park Road on the Toll Road in Herndon, VA, is “not METRO contiguous” and will be hard to back-fill once Booz leaves at the end of the year.
5) The overall fundamentals of the portfolio remain below its peers’ average.
6) The stock remains “expensive on a replacement cost basis with an office TEV of $224/SF vs gross/adjusted replacement cost of $258/$215/SF.”
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7) The near term Funds From Operations (FFO) generation is “primarily a function of levering up through 2015 with low cost debt.”
8) The annualized FFO run rate of $2.10 per share for the second half of the year will be likely pulled down in early 2017 by $250-$350 million of 2H15 dispositions or an equity raise.
Latest Ratings for OFC
|Aug 2016||BTIG Research||Initiates Coverage on||Buy|
|Aug 2016||JP Morgan||Maintains||Neutral|
|Apr 2016||Credit Suisse||Upgrades||Neutral||Outperform|
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