3 REITs BB&T Capital Is Buying

BB&T Capital analyst David Toti recently assumed coverage on several residential REITs. Here’s a breakdown of BB&T’s top three names in the group.

Camden Property Trust CPT
Toti explains that Camden’s major markets of Texas, Florida and Washington, DC are all above-average employment gainers over time, but they all also experience a large amount of volatility on both the supply and demand side. Recently, the volatility has been to the downside.

“We remain concerned about the outlook for those markets, as well, and its long-term impact to revenue growth (already decelerating by most measures),” Toti writes. However, Camden is currently priced at a 16 percent discount to net asset value (NAV), and BB&T believes it has upside for now. The firm rates Camden a Buy and set a $90.50 price target for the REIT.

Essex Property Trust Inc ESS
Essex owns, operates and develops rental apartments on the U.S. West Coast. Toti likes the firm’s solid capital structure, dependable management team, high liquidity and strong growth track record. “Our assest-by-asset analysis of the ESS portfolio suggests an aggressive FTM aggregate cap rate of 4.55% for the portfolio, driving our valuation to lofty heights,” Toti adds.

BB&T initiates Essex at Buy with a $259.50 price target.

Post Properties Inc PPS
Post owns multifamily units primarily in the Southeast/Sunbelt region of the U.S. “The company has a sizable concentration in metro Atlanta—a double-edged sword, depending on where the Atlanta housing cycle sits,” Toto explains.

Although BB&T is concerned with Post’s Atlanta exposure, the firm believes that the REIT is oversold at current levels and has room for upside. BB&T initiates Post at Buy with a $68.50 price target.

Disclosure: the author holds no position in the stocks mentioned.