UPDATE: JMP Securities Starts W. P. Carey & Co. (WPC) at Market Outperform
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JMP Securities analyst Mitch Germain initiates coverage on W. P. Carey & Co. (NYSE: WPC) with a Market Outperform rating and a price target of $87.00.
The analyst comments "We believe the final wind down of the investment management platform, following the recent merger announcement with Corporate Property Associates 18, the last generation of non-traded REITs sponsored by the company, should positively re-rate the multiple, as cash flow composition shifts to entirely real estate ownership. The merger does not detract from the current strategic plan, as management continues to forecast $1.5-$2.0B of deployment in 2022; the company has ample liquidity on hand to fulfill this target. While the merger is slightly dilutive to earnings, we see potential earnings upside from: 1) CPI-linked leases (60% of total leases), and 2) the ability to replace the secured financing on the CPA:18 portfolio with EURO-denominated debt, at significantly lower rates. The company owns one of the highest proportions of industrial properties, at roughly 50% of rents, along with some unique property sectors, such as storage (5% and growing); we believe the valuation is not adequately providing credit for the quality of these cash flows. With above-average operating growth embedded within leases, ample liquidity, and more predictable earnings, we believe shares should trade at a premium to historical levels."
Shares of W. P. Carey & Co. closed at $76.61 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, New Coverage
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