Stifel Nicolaus Upgrading Mission West Properties (MSW)

Stifel Nicolaus is upgrading shares of Mission West Properties MSW to Buy, and has a $7.50 price target on shares. In a note to investors, Stifel Nicolaus writes, "We are upgrading Mission West from Hold to Buy because 1) the Implied NOI/Cash Flow/CF less G&A cap rates are very high at 8.6%/8.1%/7.9%, 2) the $0.52/sh, 7.8% dividend should be covered for three years with asset sales, 3) we are optimistic that the 481,000 SF Apple (AAPL, NR, $327.46) lease in Cupertino will be renewed (per management) at $4.80/SF/year above current rates in 2012, 4) we are optimistic that 515,700 SF leased by Microsoft (MSFT, Buy, $25.37) in Mountain View will also renew in 2014, 5) in the event one or both do not renew, we like the location and value of each campus vacant, 6) the current TEV per SF (of office/flex/industrial/manufacturing -- a very mixed portfolio) is $135/SF a 24%/15% discount to our estimate of gross/adjusted replacement cost of $178/$158." Shares of MSW closed at $6.63 on Friday.