BMO Capital Speaks To Investor Concerns With VEREIT

BMO Capital analysts Paul Adornato and Thomas Polise spoke to Vereit Inc VER regarding investors' concerns. However, the brokerage reiterated its rating of Outperform, kept a price objective of $11.00 on the shares of the company and sees 19 percent return from the current levels.

The two analysts, who remained positive on the stock, said, "Based on conversations with VEREIT management at last week's NAREIT event and subsequently, we have renewed conviction in our Outperform rating based on incremental information. We list recent investor concerns, including what we believe to be a hot topic: whether management is prone to issuing equity given VER's recent stock price move."

Related Link: VEREIT Inc Announces Upsizing And Pricing Of $1.0 Billion Of Senior Notes

BMO pointed out some investor concerns included VEREIT's propensity to issue equity given its balance sheet priorities and its stock price. The stock price now trades above BMO and consensus NAV, which often creates a trigger point for deciding to issue equity in other sectors.

The brokerage noted that given the long-term nature of Net Leases, the often long holding periods of the assets, and acquisition pricing often fueled by DCF analysis over the life of the lease, NAV calculations in the Net Lease sector are less reliable or less accurate than the REIT sub-sectors, according to the brokerage.

The two analysts surmised that this cuts down the reliability of NAV premium as an equity trigger. The analysts also discussed other concerns including timing of a potential IG rating and restoring the Cole platform's productivity and value.

At time of writing, VEREIT was up 0.26 percent at $9.76.