JMP Securities: Updates Ratings On 5 REITs After Earnings

• Blackstone Mortgage Trust Inc BXMT,
• Chesapeake Lodging Trust CHSP,
• Equity Commonwealth EQC,
• Host Hotels & Resorts Inc HST and
• Sabra Health Care REIT Inc SBRA

Tale Of The Tape - Past Year

Blackstone Mortgage Trust - Market Outperform

• BXMT reported "4Q core EPS of $0.52, which beat consensus by a penny and matched the new $0.52 dividend that was set in December 2014; marking the second consecutive quarter where core earnings fully covered the dividend."
• Blackstone management believes it can "continue to deliver on the targeted ROI range of LIBOR +12-13%," (despite increased competition from larger banks).
• JMP trimmed its 2015 core EPS estimate to $2.20 from $2.25, primarily due to a slightly lower net interest spread assumption;
• JMP introduced an initial 2016 core estimate of $2.40; and 1Q16 dividend projection of $0.56.

Host Hotels & Resorts - Market Outperform

• Host reported disappointing 4Q14 results and provided renovation-impaired guidance that was well below what the Street was expecting.
• "Group business weakened in 4Q, and renovations at several key properties impacted performance."
• "4Q RevPAR grew 3.2% on a 60 bps decline in occupancy and a 3.6% gain in rate."
• "Portfolio occupancies are at or near historic peaks, making each incremental point of occupancy that much harder to come by."

Chesapeake Lodging Trust - Market Outperform

• "CHSP reported a slightly disappointing quarter, with adjusted EBITDA of $33.7M falling short of guidance of $33.8-35.3M on soft RevPAR growth and weaker than expected margin expansion."
• "In 4Q, the 20-hotel portfolio posted pro forma RevPAR growth of +4.9%, just short of guidance of +5-7%, and adjusted hotel EBITDA margin expansion of +20 bps to 30.5%, which also fell short of margin expansion guidance of 30.8-31.5%."
• "CHSP has been active in the acquisition market, acquiring the 337-room JW Marriott SF Union Square for $147.2M in 4Q, and announcing on Thursday an agreement to acquire its first hotel in Miami's South Beach market, the James Royal Palm for $278M, or 13.9x forward EBITDA."

Sabra Health Care REIT - Market Underperform

• "SBRA reported 4Q AFFO of $32M, in line with the JMP estimate of $31.9M, and reiterated previous 2015 guidance of $2.05- $2.10 without acquisitions."
• JMP maintained its "2015-2016 AFFO estimates of $2.22 and $2.25, respectively, as capital structure adjustment benefits are expected to be offset by G&A increases."
• "SBRA currently trades at a 35% premium to [JMP's] FTM NAV estimate, compared to the overall HC REIT industry at 20%, despite showing higher than average leverage levels…"

Equity Commonwealth - Market Perform

• EQC has begun a transition phase, "whereby management is in the midst of instituting a multi-year plan focused on culling an extensive portion of the assets, and significantly de-levering the balance sheet."
• "Management has been reluctant to shed too much insight into the strategy until recently, as $2-$3B of sales are planned, with proceeds allocated to debt reduction, share buybacks, and special dividends necessary to maintain REIT status."
• JMP is "incrementally positive" on this strategy; noting "the potential for a turnover of the shareholder base, and reluctance for investors to get involved in a story with an unstable near-term outlook as the portfolio takes shape, may curb share performance in the near term."