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REITs
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Apartment REITsBrief clip from a lengthy report by Baird Equity Research.... ■ Outperform ratings reiterated on AVB, BRG, CPT (2019 Best Idea), IRET, IRT, and MAA. Full recommendation bullets for all Outperform-rated names on page 5. - AVB: Only fifth-highest 2020 AFFO multiple (22.1x) among Apartment REITs despite improving development earn-in, exposure to accelerating bi-coastal markets, and best-in- class balance sheet. - BRG: Largest NAV discount among Apartment REITs, exposure to Sunbelt markets leading nation in household formation, high insider ownership. - CPT: Negative 2Q earnings reaction after top-line guidance was not increased from 1Q (we chalk this up to accurate initial forecast) ignores same-property growth trailing only UDR next year, expecting continued Sunbelt employment and household growth outperformance. - IRET: 6.2% implied cap rate a major outlier, internal growth finally moving AFFO/share and should for several years. - IRT: Value-add renovation program driving outsized internal growth, discounted price point relative to new supply near its sub-markets. - MAA: Top-line benefits of Post merger now being realized and likely in early stages, under- appreciated balance sheet, defensive price point in many markets.
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