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Leverage, Weak Guidance Could Put Pressure On Whitestone Dividends, Analyst Says

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Leverage, Weak Guidance Could Put Pressure On Whitestone Dividends, Analyst Says

High leverage and weak 2018 guidance could put pressure on Whitestone REIT (NYSE: WSR)’s dividend policy, according to analysts at Suntrust Robinson Humphrey.

The Analyst

Ki Bin Kim Of Suntrust Robinson Humphrey downgraded Whitestone from Hold to Sell, lowering the REIT’s price target from $12 to $10.

The Thesis

Low 2018 earnings guidance estimates imply a third straight year of funds from operations (FFO) growth decline, putting pressure on dividends, Kim said in a note. (See the analyst’s track record here)

Also putting downward pressure on dividends is the REIT’s high net debt levels.

“The Company may need to sell a significant portion of its assets to reduce leverage, which again would place further pressure on dividend coverage,” the analyst said.

Kim also believes the REIT is overpaying on its G&A expenses, which could be a burden on its overall cash position.

Price Action

At time of publication, shares of Whitestone were trading down 12.4 percent at $10.85

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Latest Ratings for WSR

DateFirmActionFromTo
Jun 2020JMP SecuritiesReinstatesMarket Perform
May 2020B. Riley FBRMaintainsNeutral
Apr 2020B. Riley FBRMaintainsNeutral

View More Analyst Ratings for WSR
View the Latest Analyst Ratings

 

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