FBR Capital Downgrades The RMR Group Inc. (RMR) to Market Perform
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FBR Capital downgraded The RMR Group Inc. (NASDAQ: RMR) from Outperform to Market Perform with a price target of $39.00 (from $31.00).
Analyst Bryan Maher commented, "With shares up significantly and the incentive fees not guaranteed, we lower our rating on RMR to Market Perform (from Outperform), but our price target goes up to $39 (from $31). RMR has delivered a stunning debut as a new public company in 2016: When it first started trading on December 14, 2015, its shares were just $11.89; since then, shares are up 210.4% (versus 7.9% for the S&P 500, exdividends). We believe investors have increasingly latched on to the structure and predictability of the RMR fee streams derived from externally managing four large REITs that span hotels (HPT), office (GOV and SIR), and healthcare (SNH). RMR also earns fees from several operating companies, including TravelCenters of America (TA), Sonesta Hotels, and Five Star (FVE). The icing on the cake is that it can also earn material incentive fees from its Managed REITs when they outperform their respective benchmarks. In January, RMR received a $62.3M incentive fee from HPT and appears increasingly likely to get another substantial incentive fee in January 2017, which could exceed $70M."
Shares of The RMR Group Inc. closed at $36.91 yesterday.
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