FBR Capital Remains Bullish Following Select Income REIT's (SIR) 3Q Miss
- Top 10 News for 12/2: Crude Rips on OPEC Cut; Starbucks' Schultz Steps Down; Nonfarm Payrolls Flat in Nov.
- Unemployment Rate Drops to 4.6%
- Bond yields slip on U.S. jobs data, euro steady before Italy vote
- Alibaba (BABA) Founder Jack Ma Discuss Plans to Retire; 'I Don't Want to Die at the Office'
- Starbucks Coffee (SBUX) CEO Howard Schultz to Step Down, Appointed Executive Chairman; Kevin Johnson New CEO
Get inside Wall Street with StreetInsider Premium. Claim your 2-week free trial here.
FBR Capital maintained an Outperform rating on Select Income REIT (NASDAQ: SIR), and cut the price target to $34.00 (from $35.00), following the company's 3Q earnings report. Adjusted EBITDA decreased 1.6% to $83.3 million, versus the consensus of $84.9 million. The shortfall was partially due to the absorption of tax and utility expenses at two recently vacated properties in suburban Boston. Normalized FFO decreased 3.4% to $0.69, below the consensus of $0.71.
Analyst Bryan Maher commented, "SIR posted a modest 3Q16 miss as utility costs related to materially warmer temperatures this summer and two recent vacancies pushed expenses higher. Although SIR is predominantly a single-tenant net lease REIT, when a building is vacated, SIR absorbs the expenses (utilities and property taxes) until the property is re-leased. Total revenue of $115.0 million was just short of our $115.6 million estimate, while occupancy held steady at 96.8% versus 2Q16. While we have not modeled for material acquisition activity (other than what has been announced), we would note that management commented on its earnings call that the acquisition environment is experiencing "aggressive property valuations" and has thus been relatively inactive. That said, management also noted that since the end of the summer, it is seeing materially more deals to review. We continue to believe that SIR owns a high-quality portfolio of commercial and industrial assets and that the shares trade at a very attractive at 13.3x 2016E EBITDA. We reiterate our Outperform rating, but our price target comes down $1 to $34."
Shares of Select Income REIT closed at $25.51 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Jefferies Cuts Price Target on Workday (WDAY) to $71 Following 3Q
- Jefferies Raises Price Target on Zumiez, Inc. (ZUMZ) to $23 Following 3Q
- Jefferies Cuts Price Target on Kroger (KR) to $30 Following 3Q and Guidance
Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Analyst EPS View, Analyst PT Change
Related EntitiesEarnings, Definitive Agreement
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!