Compass Point See Gramercy Property Trust (GPT) Dividend Set to Grow

Compass Point reiterate their Buy rating on Gramercy Property Trust Inc (NYSE: GPT) and raise the price target to $34 (from $33) as dividends are set to grow. GPT reported 1Q15 earnings that were in-line with estimates of $0.35 per share. GPT also showed a potential dividend increase that could easily to 50%.

Compass Point analyst, Wilkes Graham, reported on GPT, saying, "We remain convicted that GPT, which is trading at a 5% discount to the $27.75 price at which it raised equity in April, has 30% upside over the next year that should be realized via guidance increases, a dividend increase that could easily top 50%, and multiple expansion as the portfolio grows. We are publishing a fully updated model for the April $259M equity raise and 1Q15 earnings. Management once again pointed to the current above average environment for portfolio acquisitions, ostensibly due to the ARCP (NC) shake-up, this time as a reason for electing to raise capital in April perhaps earlier than otherwise planned (and a quarter ahead of what our previous model assumed). The earlier raise lowers our 2015 estimate slightly, but 4Q15 run-rate core FFO earnings is now $2.07 compared to management's standing $1.80-$2.00 guidance due to our increased acquisition assumptions of $1.1B/yr compared to $600-$900M guidance, and $1.1B of assets either closed YTD ($594M at 8% cap rates, no less), currently under contract ($99M), or in advanced discussions ($400M). Our twelve-month $34.00 PT is in line with the level at which the stock needs to trade in 2Q16 for management to maximize its $20M incentive stock comp plan, and management reiterated on the 1Q15 conference call its ability to pull two specific levers in the coming quarters to reach this goal: (1) "revisiting" guidance by way of higher acquisition volumes once timing of the $400M of assets in advanced discussions firms up, and (2) raising the dividend to a higher payout ratio as said timing of acquisitions becomes clearer."

For an analyst ratings summary and ratings history on Gramercy Property Trust click here. For more ratings news on Gramercy Property Trust click here.

Shares of Gramercy Property Trust closed at $26.37 yesterday.

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