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UPDATE: JMP Securities Reiterates On American Realty Capital Properties As Balance Sheet Transforms


In a report published Tuesday, JMP Securities analyst Mitch Germain reiterated a Market Outperform rating on American Realty Capital Properties (NASDAQ: ARCP), but lowered the price target from $18.00 to $16.00.

In the report, JMP Securities noted, “American Realty Capital Properties completely transforms its balance sheet as leverage declines considerably following an upsized equity offering and shopping center portfolio sale, creating additional liquidity to fund future investments; maintain our Market Outperform rating.

"While the capital raise is initially dilutive, it has positive implications to earnings and NAV as proceeds are deployed into high-yielding acquisitions. We view the current share price as a compelling entry point, with the stock trading at 11.2x 2014 earnings, a considerable discount to the triple-net REIT sector average of 14x.

"We believe recent events have clearly removed a capital raise overhang from the shares, strengthened the company's liquidity position, and likely introduced a more stable shareholder base of REIT-dedicated investors; these efforts have positively re-priced the multiple, in our view.

"Our AFFO/share estimates for 2014/2015 decline from $1.15/$1.32 to $1.10/$1.28 due to dilution from the equity raise, while taking into account the shopping center sale, re-deployment of proceeds, and also making a slight reduction in contribution from the private capital business just to remain conservative following a slowdown in fundraising in late 1Q.

"We also reduce our price target from $18 to $16, based on a 15x multiple (unchanged) on 2014 AFFO. When coupled with the dividend, shares offer 38% upside, and as such, we believe investors should be accumulating shares at current levels.”

American Realty Capital Properties closed on Friday at $12.30.

Latest Ratings for ARCP

Mar 2015UpgradesEqual-WeightOverweight
Mar 2015AssumesHold
Mar 2015Initiates Coverage onMarket Perform

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Posted-In: JMP Securities Mitch GermainAnalyst Color Price Target Analyst Ratings


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