Real Estate Sector Expertise
Always attuned to the opportunities and changing conditions in the real estate industry, National is particularly active in subsectors such as residential multifamily, industrial/ warehouses, as well as internet-resistant retail centers in well-defined geographies. With an understanding of the ongoing capital needs of real estate vehicles to grow and expand, our banking team often focuses on repeat mandates of capital raising and advisory services for private and public corporate issuers or funds with various strategies and investment horizons—from short-term opportunistic asset monetization to long term repositioning and holding. Our real estate banking professionals maintain a steady focus on sustainable and improving dividend yield with the potential for additional capital appreciation.
Real Estate Sector Coverage
Real estate research coverage at National is a two-pronged approach, combining broad, multi-sector fundamental knowledge with deep company and security-specific analysis. The methodology employed by the sector’s dedicated analyst provides investors a unique approach to investing in the REITs sector that is quantitatively oriented, streamlined and disciplined. The research methodology accommodates a variety of secondary variables, including interest rates, supply-demand ratios, and the political/tax landscape.
Bluerock Residential Growth REIT, Inc. (BRG: Buy, $13 PT)
May 8, 2019– 1Q19 core FFO/sh. was in-line with our estimate and $0.01 lower than consensus, same-store growth trajectory was strong reflecting regional exposure and renovations, external growth activity was quiet (in-line with BRG’s expectation of timing) and series B preferred issuance continued. Please refer to our BRG’s initiation report titled “Strong Markets at a Discount; Initiating Coverage with BUY/$13.00 PT” published on May 3, 2019 for a detailed company analysis.
Independence Realty Trust, Inc. (IRT: Neutral, $10 PT)
April 26, 2018– FFO dividend coverage still eludes IRT, despite having grown its community count 16.8% and its gross revenues 16.9%. G&A is up 15% Q/Q and 32.2% Y/Y (adjusted for stock comp expense), a grave concern given unit growth is only half of that Y/Y at +13.4%.
Mid-America Apartment Communities, Inc. (MAA: Neutral, $96 PT)
May 10, 2018– We are maintaining our NEUTRAL rating and $96 price target as MAA finalizes working through the PPS integration, which initially seems to not be as fruitful as when it purchased Colonial in 2013.
Monmouth Real Estate Investment Corp. (MNR: Buy, $20 PT)
May 9, 2018– With arguably one of the most enviable tenant rosters in the space, MNR is poised to continue to deliver returns to shareholders with outsized performance. We are maintaining our BUY rating and $20.00 price target.
Plymouth Industrial REIT (PLYM: Buy, $21 PT)
June 19, 2019– We are initiating coverage on the shares of Plymouth Industrial REIT with a BUY rating and $21 price target. Our BUY rating is driven by a strong and accretive acquisition pipeline, improving balance sheet that provides access to capital to fund external growth, exposure to industrial real estate and discounted valuation.
Preferred Apartment Communities, Inc. (APTS: Buy, $26 PT)
May 3, 2018– 1Q18 Earnings Recap: Net operating income was up 11.42% Q/Q while net RE assets were only up 5.21% Q/Q. Further, FFO was up 18.33% Q/Q and 25.15% Q/Q on a per share basis, yet the shares have remained essentially unchanged. With a highly fragmented preferred shareholder base, a large put back event is a non-issue and does not warrant the discount that is seemingly attached to APTS’ shares.
Rexford Industrial Realty, Inc. (REXR: Buy, $34 PT)
May 2, 2018– REXR reported 1Q18 FFO per share of $0.27, ahead of the $0.25 consensus estimate and ahead of our $0.26 estimate. In the quarter, REXR’s SS NOI was up a notable 9.3% Y/Y, which speaks directly to the strength of its core business.
Terreno Realty Corporation (TRNO: Buy, $40 PT)
May 7, 2018– For 1Q18, TRNO posted RECORD FFO per share of $0.32, +8.5% Y/Y and + 11.68% Q/Q on what were record revenue in the quarter of $37.11M. The record revenues were driven by a record rent per square of $9.21, which is up 10.8% Y/Y. Quite frankly, the industrial RE market is as strong as ever and that is clearly reflected in the financials put forth by TRNO.
XAI Octagon Floating Rate & Alternative Income Term Trust (XFLT: Buy, $13 PT)
May 30, 2019– XFLT posted NII/share of $0.22 for F2Q19, matching our estimate and penny above the quarterly dividend. For the 3/31/19 quarter loan prices rebounded sharply after the average bid fell by 5.8% Q/Q for the 12/31/18 quarter. However, CLO equity prices remain depressed. Indeed, XFLT’s CLO equity FV/Cost improved to 89.7% at 3/31/19 from 86.7% Q/Q. This remains far below the 95.4% level at 9/30/18. We believe many tier one collateral managers continue to offer effective yields of between 13%-15% despite a loan market that has again forgotten what the word “volatility” means.