Market Overview

2 REIT Picks From Bank Of America

Share:
2 REIT Picks From Bank Of America

The Analyst

Bank of America Merrill Lynch's James Feldman upgraded two REIT stocks and downgraded one.

Alexandria Real Estate Equities Inc (NYSE: ARE) and Cousins Properties Inc (NYSE: CUZ) were upgraded from Neutral to Buy, while Corporate Office Properties Trust (NYSE: OFC) was downgraded from Buy to Neutral. Feldman increased his price target for Alexandria Real Estate Equities from $133 to $141 and maintained the price target for Cousins Properties at $10. Feldman decreased the price target of Office Properties Trust from $39 to $33. (See Feldman's track record here.) 

The Thesis

The analyst said he expects Alexandria Real Estate Equities to outperform in 2018, as it still trades at the second best PEG and PEGY ratios in the office sector and has a 5-percent discount to Feldman's NAV. Feldman said he's most comfortable with this upgrade, because he already estimates above-average growth for the company in 2019. The key risk for Alexandria Real Estate Equities is the CEO transition, the analyst said. 

Feldman expects Cousins Properties' high quality sunbelt portfolio to benefit from outsized population and job growth in its markets. With 4.3 times net debt/EBITDA, the company has one of the strongest balance sheets among REITs, the analyst said. Cousins Properties is planning to sell its Miami and Orlando assets by the first quarter of 2018, with no plans to redeploy the capital, said Feldman. If it uses the capital for an acquisition, the analyst's 2018 FFO/share estimate is going to increase above consensus.

The previous Buy rating for Office Properties Trust was based on growing demand for the company's high security office space, due to pro-defense spending in the U.S., rising global military tensions and the use of cyberwarfare against the U.S. and corporations, Feldman said. He still expects that this scenario will play out, but estimates the earnings impact will take at least another year.

Related Links:

3 REITs To Get Bullish On In 2018

Kimco Realty Bears: Beware The Potential For M&A

Latest Ratings for CUZ

DateFirmActionFromTo
Sep 2020Wells FargoMaintainsOverweight
May 2020BairdMaintainsOutperform
Apr 2020StifelMaintainsBuy

View More Analyst Ratings for CUZ
View the Latest Analyst Ratings

 

Related Articles (ARE + CUZ)

View Comments and Join the Discussion!

Posted-In: Bank of America Merrill LynchAnalyst Color REIT Upgrades Downgrades Price Target Analyst Ratings Real Estate Best of Benzinga

Latest Ratings

StockFirmActionPT
PMTB of A SecuritiesMaintains18.5
IVRB of A SecuritiesMaintains3.0
EFCB of A SecuritiesMaintains15.5
NYMTB of A SecuritiesMaintains3.5
NLYB of A SecuritiesMaintains8.5
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com