24/7 Wall St. » UDR

Expected Upside in Lifestyle-Oriented REITs (HCN, SNH, UDR, ESS, CPT, RLJ, DRH, HHC, GGP)

Paul Ausick — Thu, 10 Nov 2011 19:28:00 +0000

The number and types of real estate investment trusts (REITs) is both large and varied, and, thus, better taken in smaller chunks. Our focus today hits those REITs that offer senior living centers, apartment buildings, and some mixed-use properties.

We’ve also culled some stocks from today’s list because either they don’t pay a dividend — or pay a low dividend for a REIT — or the company has already surpassed its current median target price. The companies we’ve selected are Health Care REIT, Inc. (NYSE: HCN), Senior Housing Properties Trust (NYSE: SNH), UDR, Inc. (NYSE: UDR), Essex Property Trust Inc. (NYSE: ESS), Camden Property Trust (NYSE: CPT), RLJ Lodging Trust (NYSE: RLJ), Diamondrock Hospitality Co. (NYSE: DRH), The Howard Hughes Corp. (NYSE: HHC), and General Growth Properties Inc. (NYSE: GGP).

Howard Hughes Corp. is not a REIT, but its operations are a near-identical fit with those of the trusts. It does not pay a dividend, but its upside potential is significant and we include it here as a “quasi-REIT.”

All data from Yahoo! Finance, and share prices were collected in the early afternoon today.

Health Care REIT, Inc. (NYSE: HCN) has a median target price of $53.00 from 13 brokers. Shares are trading today at $49.61, for an implied gain of $3.39, or 7%. HCN’s forward P/E is 13.11 and the company pays a dividend yield of 5.6%. The stock’s 52-week trading range is $41.03-$55.21, and at today’s price that’s about 21% above its 52-week low and 10% below the 52-week high.

HCN today completed a secondary offering of 12.65 million shares priced at $50/share. The company raised $632.5 million, which it plans to use for future investment, to pay down debt, and for general corporate purposes. Shares had been trading near the target price in advance of the offering. The attractive dividend yield makes the stock worth considering.

Senior Housing Properties Trust (NYSE: SNH) has a median target price of $24.00 from 7 brokers. Shares are trading today at $21.27, for an implied gain of $2.73, or 13%. SNH’s forward P/E is 7.31 and the company pays a dividend yield of 7%. The stock’s 52-week trading range is $19.09-$24.66, and at today’s price that’s about 11% above its 52-week low and 14% below the 52-week high.

Senior Housing Properties pays the highest dividend of any stock in this group and there is still headroom a nice implied gain. The 52-week high is barely above the target price, which could indicate a target price boost soon.

UDR, Inc. (NYSE: UDR) has a median target price of $27.00 from 18 brokers. Shares are trading today at $24.31, for an implied gain of $2.69, or 11%. UDR’s forward P/E is 17.12 and the company pays a dividend yield of 3.2%. The stock’s 52-week trading range is $20.04-$27.26, and at today’s price that’s about 21% above its 52-week low and 11% below the 52-week high.

UDR has been able to raise its rents due to its strategy of buying apartment properties in cities where job growth is better than average and higher priced housing is performing better.

Essex Property Trust Inc. (NYSE: ESS) has a median target price of $145.00 from 20 brokers. Shares are trading today at $135.09, for an implied gain of $9.91, or 7%. Essex’s forward P/E is 20.9 and the company pays a dividend yield of 3%. The stock’s 52-week trading range is $105.60-$148.44, and at today’s price that’s about 28% above its 52-week low and 9% below the 52-week high.

Essex’s target price is lower than its 52-week high and its forward P/E is higher than average as well, indicating that the stock could be priced at very near its full value. The 7% implied gain is further evidence that expectations for growth are not all that rosy.

Filed under: REIT Tagged: CPT, DRH, ESS, GGP, HCN, HHC, RLJ, SNH, UDR

Secondary Offering Floodgates Open (BGS, CMFO, COIN, LOPE, LGCY, OPEN, PRKR, KGS, UDR, IACI)

247wallst — Tue, 15 Sep 2009 19:30:55 +0000

What happens when market rallies go on and on? Outside of the basics, you just about always get a flurry of corporations and public entities selling shares as secondary offerings flood the market. Between yesterday and today we have seen a deluge of secondary offerings either priced or filed from the likes of B&G Foods, Inc. (NYSE: BGS) China Marine Food Group Limited (AMEX: CMFO), Converted Organics Inc. (NASDAQ: COIN), Grand Canyon Education, Inc. (NASDAQ: LOPE), Legacy Reserves LP (NASDAQ: LGCY), OpenTable, Inc. (NASDAQ: OPEN), ParkerVision, Inc. (NASDAQ: PRKR), Quicksilver Gas Services LP (NYSE: KGS), and UDR, Inc. (NYSE: UDR).

As long as you keep seeing the DJIA, S&P, and NASDAQ hitting new intermediate highs and the market does not roll over, you can expect the floodgates for companies raising capital to continue. Full details on each offering or filing are below.

B&G Foods, Inc. (NYSE: BGS) priced its public offering of 10,000,000 shares of common stock at $8.00 per share in a sale through Credit Suisse, Barclays Capital, and BofA Merrill Lynch. The $80 million in gross proceeds comes to $75.6 million after all fees are deducted, or $86.9 million if the overallotment option is exercised in full. After a 4% drop to $8.12 today, we have the market cap listed as $291 million.

China Marine Food Group Limited (AMEX: CMFO) has filed to sell up to $40,000,000.00 of any combination of Common Stock, Preferred Stock, Depository Shares, Warrants, Rights and Units. The company noted that it will retain a broad discretion over the use of the net proceeds under the “for general corporate purposes.” Without the consideration of new shares, we show the market cap of this one as $116.5 million. At $5.06, it is also at the upper end of its $1.10 to $5.83 range over the last year.

Converted Organics Inc. (NASDAQ: COIN) is selling units with stock and warrants, with public warrants under the “COINZ” ticker. The sale of up to $44,476,350.00 in stock and warrants is taking place through Chardan Capital Markets, LLC.

Grand Canyon Education, Inc. (NASDAQ: LOPE) priced 6,000,000 shares at $16.50 through Credit Suisse and BofA Merrill Lynch. Of the sale, only 1,000,000 shares were sold by the company as 5,000,000 shares were unloaded by backer Endeavour Capital. As the discount was effectively none, shares are up almost 4% at $17.15.

Legacy Reserves LP (NASDAQ: LGCY) sold 3.3 million units at $15.85 per unit through Raymond James and RBC Capital Markets. The oil and gas partnership plans to use the funds to reduce outstanding borrowings under its revolving credit facility. The near-$50 million compares to market cap of $509 million after a 2.8% drop to $16.40 today.

OpenTable, Inc. (NASDAQ: OPEN) filed to sell 3,790,033 Shares through BofA Merrill Lynch and others. If the overallotment is exercised, this would come to 4,358,537 shares or a value of $116,076,558 based upon the filing figures. Be advised, none of the funds from this go back to the company as every one of these shares are being sold by insiders and venture backers. IAC/InterActive Corp. (NASDAQ: IACI) is selling some 750,000 as one of the backers here.

ParkerVision, Inc. (NASDAQ: PRKR) has filed to sell up to $50 million in securities in any combination of Common stock, Preferred stock, Warrants and Debt. This company has a market cap of $127 million before the effects of any such changes, if any, from this filing.

QUICKSILVER GAS SERVICES LP (NYSE: KGS) has filed to sell any combination of Common Units, Debt Securities, Warrants, Purchase Contracts, and Units for an amount of up to $150 million.

UDR, Inc. (NYSE: UDR) has entered into an at-the-money sales agreement with Merrill Lynch and Morgan Stanley as sales agents and/or principals to sell up to 15,000,000 shares of common stock at prevailing market prices at the time of sale.

This is also just a snapshot of the immediate deals that were filed in the last 48 hours or which priced. There are many other deals in the hopper for this week and next.

JON C. OGG
SEPTEMBER 15, 2009

Posted in Internet, Oil & Gas, Private Equity, Secondary Offering Tagged: BGS, CMFO, COIN, IACI, KGS, LGCY, LOPE, OPEN, PRKR, UDR

Early Bird Analyst Upgrades & Downgrades (ENS, ERIC, SHW, UDR, BT, BLDR, PCAR, VE)

247wallst — Fri, 15 May 2009 11:19:47 +0000

It is looking a bit light on the analyst calls from Wall Street this morning. Here are Friday’s top upgrades and downgrades seen with more than two hours until the market opens:

EnerSys (ENS) Raised to Buy at Jefferies.
LM Ericsson (ERIC) Raised to Neutral from Sell at UBS.
Sherwin-Williams (SHW) Raised to Neutral at Goldman Sachs.
UDR (UDR) Raised to Outperform at KBW.
BT Group (BT) Cut to Sell at UBS.
Builders Firstsource (BLDR) Cut to Neutral at Sun Trust Robinson Humphrey.
PACCAR (PCAR) Cut to Underweight at HSBC.
Veolia Environnement (VE) Raised to Buy at Goldman Sachs.

JON C. OGG

May 15, 2009

Posted in Analyst Calls Tagged: BLDR, BT, ENS, ERIC, PCAR, SHW, UDR, VE

Analyst Downgrade Onslaught Continues (ASML, CMG, FORM, GFIG, ICE, KLAC, MSSR, MPEL, MRG, PEET, PRXI, PHM, RGLD, JAVA, TCK, TER, UDR, VNO)

247wallst — Thu, 08 Jan 2009 07:29:54 +0000

This morning was a shocker on just how many analyst downgrades and very negative calls were out from Wall Street analysts. The sad part is this is only part of the onslaught that we are still seeing.

ASML (NASDAQ: ASML) Cut to Market Perform at FBR.
Chipotle (NYSE: CMG) Cut to Neutral at Piper Jaffray.
FormFactor (NASDAQ: FORM) Cut to Market Perform at FBR.
GFI Group (NASDAQ: GFIG) Cut to Hold at Deutsche Bank.
IntercontinentalExchange (NYSE: ICE) Cut to Hold at Deutsche Bank.
KLA-Tencor (NASDAQ: KLAC) Cut to Market Perform at FBR.
McCormick & Schmick’s (NASDAQ: MSSR) Cut to Neutral at Piper Jaffray.
Melco Crown (NASDAQ: MPEL) Cut to Hold at Deutsche Bank.
Morton’s Restaurant Group (NYSE: MRG) Cut to Neutral at Piper Jaffray.
Peet’s Coffee & Tea (NASDAQ: PEET) Cut to Neutral at Piper Jaffray.
Premier Exhibitions (NASDAQ: PRXI) Cut to Neutral at Merriman Curhan Ford.
Pulte Homes (NYSE: PHM) Cut to Neutral at JPMorgan.
Royal Gold (NASDAQ: RGLD) Cut to Sector Underperform at CIBC.
Sun Microsystems (NASDAQ: JAVA) Cut to Sell from Neutral at Goldman Sachs (added details).
Teck (NYSE: TCK) Cut to Neutral at UBS.
Teradyne (NYSE: TER) Cut to Market Perform at FBR.
UDR Inc. (NYSE: UDR) Cut to Sell at Goldman Sachs.
Vornado (NYSE: VNO) Cut to Neutral at Goldman Sachs.

Jon C. Ogg
January 8, 2009

Posted in Analyst Calls Tagged: ASML, CMG, FORM, GFIG, ICE, JAVA, KLAC, MPEL, MRG, MSSR, PEET, PHM, PRXI, RGLD, TCK, TER, UDR, VNO

Top Pre-Market Analyst Upgrades & Downgrades (DVN, ECA, STR, RSG, APC, AIN, AVB, BRE, CBST, DLTR, MEOH, SOA, SU, UDR)

247wallst — Mon, 08 Dec 2008 07:51:17 +0000

These are some of the top pre-market upgrades and downgrades we have seen from Wall Street analysts this Monday morning:

Devon Energy (DVN) Raised to Buy at Jefferies.
EnCana (ECA) Raised to Neutral at Goldman Sachs.
Questar (STR) Raised to Buy at Goldman Sachs.
Republic Services (RSG) Raised to Outperform at FBR.
Anadarko Petroleum (APC) Cut to Sell from Buy at Goldman Sachs.
Apartment Investment (AIV) Cut to Market Perform at KBW.
AvalonBay (AVB) Cut to Underperform at KBW.
BRE Properties (BRE) Cut to Underperform at KBW.
Cubist (CBST) Cut to Underperform at Leerink Swann.
Dollar Tree (DLTR) Cut to Market Perform at FBR.
Methanex (MEOH) Cut to Sector Perform at CIBC.
Solution (SOA) Cut to Neutral at Goldman Sachs.
Suncor Energy (SU) Cut to Sell at Goldman Sachs.
UDR (UDR) Cut to Market Perform at KBW.

Jon C. Ogg
December 8, 2008

Posted in Analyst Calls Tagged: AIN, APC, AVB, BRE, CBST, DLTR, DVN, ECA, MEOH, RSG, SOA, STR, SU, UDR

Top Pre-Market Analyst Upgrades (BXP, DWA, DUK, MET, MTB, PRXL, POR, PFG, PSA, UDR)

247wallst — Fri, 10 Oct 2008 07:02:08 +0000

These are some of the top pre-market analyst calls we are seeing this Friday morning:

Boston Properties (BXP) Raised to Outperform at FBR.
DreamWorks Animation (DWA) Raised to Buy at Jefferies.
Duke Energy (DUK) Raised to Neutral at Goldman Sachs.
MetLife (MET) Resumed at Overweight at Morgan Stanley.
M&T Bank Corp (MTB) Raised to Neutral at Baird.
Parexel (PRXL) Raised to Outperform at William Blair.
Portland General (POR) Raised to Buy at Goldman Sachs.
Principal Financial (PFG) Raised to Equal-weight at Morgan Stanley.
Public Storage (PSA) Raised to Outperform at Wachovia.
UDR Inc. (UDR) Raised to Outperform at FBR.

Jon C. Ogg
October 10, 2008

Posted in Analyst Calls Tagged: BXP, DUK, DWA, MET, MTB, PFG, POR, PRXL, PSA, UDR

Multifamily REIT Goes On A Cleanse (UDR)

247wallst — Tue, 29 Jan 2008 18:51:42 +0000

Tonight a multifamily REIT operator called UDR, Inc. (NYSE: UDR) is announcing a transformational deal along with its earnings. The company reported funds from operations (FFO) of $0.43 before a one-time adjustment (and $0.40 after) and it looks like the street was expecting $0.50. This is down almost 8% after realignments. But because this company is going to be greatly different, we are not focusing on the past results so much here. UDR has signed an agreement to sell 25,684 apartment homes in 86 communities for $1.7 Billion, and it will receive $1.5 Billion in cash and a $200 million note upon the March 2008 expected close date. The sale is to DRA Advisors LLC in a joint venture with Steven D. Bell & Company.

UDR will own 40,183 homes in 146 communities upon completion of the transaction; and it will have some 47% of its base on the Pacific Coast, 24% in the Virgina-Washington D.C. corridor, 19% in Florida, and another 10% elsewhere. As a reminder, these are "renters, not owners" in these markets and we don’t buy into the notion that just because renters can’t buy a home that they want to become homeless or move back in with mom and dad. UDR now believes that the average total monthly income in 2008 per home for the 40,183 homes it owns upon completion of the sale will exceed $1,200, operating margin will exceed 70 percent, and recurring capital expenditures will be 35 percent less per home than the portfolio being sold, with an average age of the portfolio being 15 years.

As far as the proceeds, it already has a planned path:

UDR plans to invest $500 to $600 million of the proceeds in acquisitions, with about $320 million currently under contract in targeted markets;
It plans to spend $500 million to $600 million to reduce debt;
The $300 to $500 million of remaining proceeds and $200 million from the note will be used to fund additional acquisitions, repurchase stock and for a potential special dividend. UDR simultaneously increased its 7 million share buyback plan to a much higher 22 million share buyback plan;
UDR plans to maintain its current quarterly dividend of $0.33 per share.

One thing that 247WallSt.com likes to watch out for is transformational asset sales that will take a company into a cleaner and leaner operating position. We review these for our Special Situation Investing Newsletter and we also review these for our email distribution lists.

We have to run more numbers on this to reflect the new asset base versus the old asset base, and compare this new capital structure to the old one before making any formal newsletter recommendations. But we have been reviewing the apartment and home rental REIT sector for some time as many values have been overly punished. this looks like it will also de-leverage UDR’s balance sheet. The analysts that follow this are mostly "Cautious to Hold" on this, so any weakness from downgrades based upon the miss on FFO targets would probably be an opportunity more than another panic situation.

UDR’s dividend would result in a 5.87% dividend yield based on a $22.46 share price. Its 52-week trading range is $18.29 to $34.10.

Jon C. Ogg
January 29, 2008