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UPDATE: Bank of America Downgrades American Residential Properties on Updated Valuation Methodology

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In a report published Thursday, Bank of America analyst Jana Galan downgraded the rating on American Residential Properties (NYSE: ARPI) from Neutral to Underperform, and lowered the price target from $20.00 to $18.50.

In the report, Bank of America noted, “Based on our updated valuation methodology, we are downgrading ARPI to Underperform from Neutral and lowering our PO to $18.50 from $20. We apply a 5.8% cap rate to our NOI estimate based on ARPI's portfolio geographic mix. We note ARPI's cap rate is impacted by its large Texas exposure, and we will continue to monitor cap rates in its markets. Our PO is in line with our forward NAV estimate. We have updated our 2014 FFO/sh estimate to $0.40 from $0.57 because of greater interest expense from increased debt, as we forecast the company to purchase 2,848 homes in 2014.

"We think highly of ARPI's management team and note they are strong operators and underwriters of homes. However, we were disappointed with the setback of POP lease terminations in 4Q and the impact on occupancy, margins and one-time charges. While this is a one-time event and ARPI's long term strategy was to eventually operate the homes, we remain cautious as the preferred operators had difficulty in profitably operating the portfolios.”

American Residential Properties closed on Wednesday at $17.65.

Latest Ratings for ARPI

Dec 2015FBR CapitalDowngradesOutperformMarket Perform
Nov 2015Raymond JamesDowngradesStrong BuyMarket Perform
Nov 2014FBR CapitalMaintainsOutperform

View More Analyst Ratings for ARPI
View the Latest Analyst Ratings

Posted-In: Bank of America Jana GalanAnalyst Color Downgrades Analyst Ratings


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