4 REITs With Recent Analyst Downgrades

It's always interesting to see the timing of analyst downgrades. The best downgrades usually come after a lengthy price runup that looks unsustainable, but sometimes an analyst will downgrade a stock after a sizeable pullback in price. When that happens, some investors see it as a contrarian indicator, speculating that extreme bearishness is now built into the stock and a reversal could be forthcoming.

Take a look at four real estate investment trusts (REITs) that have received analyst downgrades in the past week. One just ran up over 22% on news that it has been acquired, but the others have all suffered large price declines over the past few months.

Apartment Income REIT Corp. AIRC is a Denver-based residential REIT that owns 76 rental housing communities with 26,626 units in 10 states on both U.S. coasts.

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On April 8, Apartment Income REIT announced it's being acquired by Blackstone Real Estate Partners X, a real estate fund of Blackstone Inc. BX, for $10 billion for $39.12 per share. The deal is expected to close in the third quarter of 2024 and the portfolio will be taken private. Apartment Income will cease paying dividends immediately and will no longer be a publicly traded REIT.

On April 8, Janney Montgomery Scott analyst Robert Stevenson downgraded Apartment Income REIT from Buy to Neutral. The downgrade is understandable given that Apartment Income jumped over 22% from a closing price of $31.11 on April 5 to a closing price of $38.38 on April 8. 

Broadstone Net Lease Inc. BNL is a Rochester, New York-based internally managed, diversified net-lease REIT. It was founded in 2007 and had its initial public offering (IPO) in 2020.

At the end of 2023, Broadstone's portfolio included 796 properties, with most across 44 states and a handful of them in four Canadian provinces. Broadstone has 220 tenants in 53 industries and an occupancy rate of 99.4%. Broadstone leases properties with a net-lease strategy and a weighted average lease term (WALT) of 10.5 years. Its leases carry a 2% annual rent escalation. 

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On April 8, Wolfe Research analyst Andrew Rosivach downgraded Broadstone Net Lease from Outperform to Peer Perform.

Although its metrics seem to be strong and it pays a 7.5% annual dividend yield, Broadstone is down 11.82% year to date.

Retail Opportunity Investments Corp. ROIC is a San Diego- based retail REIT that acquires, owns, leases and manages shopping centers are anchored by national or regional supermarkets and drugstores. Its properties are located on the U.S. West Coast. At the end of 2023, it owned 94 shopping centers totaling 10.6 million square feet and housing 2,057 tenants. Its portfolio lease rate was 97.7%. Retail Opportunity is a member of the S&P Small Cap 600 Index

On April 5, Bank of America Securities analyst Jeffrey Spector downgraded Retail Opportunity Investments from Neutral to Underperform and cut the price target from $14.50 to $12. 

Spector feels that Retail Opportunity will have a smaller opportunity to achieve growth than its peers. He sees full-year funds from operations (FFO) for 2024 as $1.04 per share and $1.06 per share in 2025, whereas the consensus estimate in 2024 is for $1.06 per share and $1.09 per share in 2025.

Like Broadstone, Retail Opportunity is having a tough year and is down 10.45% year to date.

Kimco Realty Corp. KIM is a Jericho, New York-based retail REIT that owns and operates 523 open-air, grocery store-anchored and nonanchored properties with 90 million square feet of leasable space as well as ground leases. Its pro-rata occupancy at the end of 2023 was 96.2%, and 94% of its properties are in coastal and Sun Belt markets. 

Kimco Realty was founded in 1958, is a member of the S&P 500 and has been publicly traded on the New York Stock Exchange (NYSE) since 1991. Its tenants include Target, Floor & Decor, Chipotle Mexican Grill, Panera Bread, Dollar Tree and Five Below stores.

On April 5, Bank of America Securities analyst Spector also downgraded Kimco Realty, from Buy to Neutral, while slashing the price target from $24 to $20.The analyst noted that Kimco will have less accretion because it acquired RPT Realty. 

The analyst sees full-year FFO in 2024 at $1.56 per share and $1.65 per share in 2025. The consensus estimate is for $1.58 in 2024 and $1.66 in 2025.

On Dec. 14, Kimco gapped up from $20.02 to a high of $22.55. But since then, the REIT has lost over 17% and recently closed at $18.66.

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