FBR Capital Starts Select Income REIT (SIR) at Outperform
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FBR Capital initiates coverage on Select Income REIT (NASDAQ: SIR) with a Outperform rating and a price target of $35.00.
Analyst Bryan Maher commented, "We are initiating coverage of Select Income REIT (SIR) with an Outperform rating and a $35 price target. We believe investors have recently reconnected with the SIR story following the Up-C transaction in 2015 with external manager RMR. In conjunction with the Up-C completion, senior management became increasingly visible in 1H16, highlighting the quality and stability of the portfolio. SIR is an office and industrial REIT that owns 120 properties, encompassing 361 buildings and leasable land parcels, with nearly 44.8 million rentable square feet, which are 96.8% leased. It is also the largest industrial property owner in Hawaii. SIR’s properties have a weighted-average remaining lease term of approximately 10.3 years, and the average building age is 12 years. SIR is rated investment grade by both Moody's and S&P and pays a 7.7% dividend. While we do not expect material near-term acquisition growth, we do find value in SIR shares—despite the recent rally—and we believe they can trade at $35, or 15x our estimate of LTM EBITDA at 3Q17. As such, we start the shares at an Outperform rating."
Shares of Select Income REIT closed at $26.42 yesterday.
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