Three Upgrades As you can see, despite his reservations, Canaccord still raised its target. GLTA
While it possesses a “positive” outlook after “solid” second-quarter results, Canaccord Genuity analyst Brendon Abrams lowered his rating BSR Real Estate Investment Trust to “hold” from “buy” in the wake of recent share price appreciation.
On Tuesday after the bell, the REIT, which operates 28 multi-family real estate properties across the Sunbelt region of the United States, reported adjusted funds from operations per unit of 15 US cents, up 7.1 per cent year-over-year and above the analyst’s estimate of 12 US cents. Same property net operating income increased a “healthy” 5.2 per cent year-over-year.
“Fundamentals in the REIT’s core Texas markets of Dallas, Houston, and Austin (combined 87 per cent of net operating income) remain strong,” said Mr. Abrams. “The quarter was highlighted by healthy internal growth, including a year-over-year increase in SPNOI of 5 per cent, as well as continued execution of the REIT’s capital recycling program, which has seen BSR materially improve the quality of its portfolio since its IPO in 2018.
“Overall, our positive outlook for BSR remains largely unchanged following the quarterly results and, as highlighted by strong leasing spreads in June of 10 per cent on new leases within its same property portfolio, we expect continued growth in cash flow per unit, particularly as the REIT’s ample acquisition capacity is deployed.”
Though he raised his target to US$15.50 from US$12.50, exceeding the average of US$14.68, Mr. Abrams lowered his rating in the wake of a 35-per-cent share price jump thus far in 2021.
“Trading in line with our NAV estimate, we believe the units are now fairly valued,” he said.
Elsewhere, CIBC’s Dean Wilkinson raised his target to US$17.50 from US$13.50 with an “outperformer” recommendation and Desjardins Securities’ Kyle Stanley also hiked his target to US$17.50 from US$14 with a “buy” rating.
“BSR has begun benefiting from the extensive two-year portfolio transformation which refocused it on higher-growth core markets in Texas,” said Mr. Stanley.