Deutsche Bank Downgrades Brixmor Property (BRX) to Hold

Deutsche Bank downgraded Brixmor Property (NYSE: BRX) from Buy to Hold with a price target of $24.00 (from $31.00).

Analyst Vin Chao said, "With few answers provided on this morning’s call, we are downgrading BRX to Hold from Buy as we simply don’t know the extent of the misconduct stemming from the Audit Committee’s review of what appears to be relatively immaterial “smoothing” of reported SS NOI results dating back to 2013."

The analyst added, "We are not moving to Sell, which could be warranted in light of lingering accounting/cultural questions, as the accounting issues announced have little to do with asset level fundamentals and a buyer could emerge, as has occurred on several occasions in the Strip space. When pressed on the involvement of the resigned CEO, CFO, and CAO, BRX would not comment beyond what was included in the PR. While their direct involvement in the “smoothing” was not confirmed, even an indirect involvement, including potentially promoting a culture of misconduct that could take years to address. While we think the Board is responding in an effective and decisive manner and believe that interim CEO, Dan Hurwitz, will be a stabilizing force, we think the fallout will take some time to work through. Also, though BRX indicated that it does not believe the issues will impact compliance with regard to its debt obligations, with $1.2B of secured mortgages rolling in 2016, we think refinancing will be more challenging or, at a minimum, more expensive."

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

Shares of Brixmor Property closed at $26.42 yesterday.

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