InterRent Real Estate Investment Trust T.IIP.UN

Revised Targets

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CIBC’s Dean Wilkinson cut his InterRent REIT  target to $15 from $15.50, keeping a “neutral” rating, while iA Capital Markets’ Johann Rodrigues trimmed his target to $18 from $20 with a “strong buy” rating and Scotia’s Mario Saric lowered his target to $16.50 from $16.75 with a “sector outperform” rating. The average is $16.71.

“Despite management’s view that cap rates may creep up in secondary/tertiary markets, we have proactively taken our own cap rate up 10 basis points (to 3.65 per cent), which has lowered our NAV by $0.50 (to $16.00),” said Mr. Rodrigues. “This is a cautious change – one we expect to make across the board through earnings season. Nevertheless, InterRent trades at a 17-per-cent discount to our revised NAV, up off a 25-per-cent trough a few weeks back but still at the widest it’s been since the REIT’s inception. This is for a REIT that just delivered 6-per-cent rent and 9-per-cent SPNOI growth, with 7-per-cent NAV growth even after the hike in our cap rate. The stock has bounced 11 per cent in Q3, 2 times the TSX REIT Index and 3 times the broader TSX. We’ve been adamant that there is a window to buy Canadian multi-family REITs at a once-in-a-decade discount, a window that closes once Trudeau drops his review of the asset class. The window is closing so take advantage quickly.”