Leverage, Weak Guidance Could Put Pressure On Whitestone Dividends, Analyst Says

High leverage and weak 2018 guidance could put pressure on Whitestone REIT WSR’s dividend policy, according to analysts at Suntrust Robinson Humphrey.

The Analyst

Ki Bin Kim Of Suntrust Robinson Humphrey downgraded Whitestone from Hold to Sell, lowering the REIT’s price target from $12 to $10.

The Thesis

Low 2018 earnings guidance estimates imply a third straight year of funds from operations (FFO) growth decline, putting pressure on dividends, Kim said in a note. (See the analyst’s track record here)

Also putting downward pressure on dividends is the REIT’s high net debt levels.

“The Company may need to sell a significant portion of its assets to reduce leverage, which again would place further pressure on dividend coverage,” the analyst said.

Kim also believes the REIT is overpaying on its G&A expenses, which could be a burden on its overall cash position.

Price Action

At time of publication, shares of Whitestone were trading down 12.4 percent at $10.85

Related Links

REIT ETFs Aren't Done Even As Rates Rise

Consider This Leveraged Retail ETF In March