Citigroup Raises Ratings on Six REITs in Single Morning Upgrade

Citigroup Raises Ratings on Six REITs in Single Morning Upgrade

The Federal Reserve reaffirmed this week that despite recent gains in the Consumer Price Index (CPI) and Producer Price Index (PPI), it is still considering three upcoming rate cuts in 2024, triggering a rally in real estate investment trusts (REITs). On March 22, three Citigroup analysts kept that enthusiasm going by upgrading a half-dozen REITs and raising price targets for all six.

Take a look at the REITs that received upgrades this week, along with some benefits each REIT has to offer.

Macerich Co. (NYSE:MAC) is a Santa Monica, California-based retail REIT specializing in the acquisition, leasing and management of 44 regional shopping centers throughout the United States. Macerich was founded in 1972 and had its initial public offering (IPO) in 1994.

Macerich has recently developed new leadership. On March 1, Jackson Hsieh was named president and CEO of the company. On March 12, Hsieh and other senior Macerich executives celebrated 30 years of operation as a public company by ringing the opening bell of the New York Stock Exchange.

On March 22, Citigroup analyst Nicholas Joseph upgraded Macerich from Sell to Neutral and raised the price target from $8 to $17.

Omega Health Investors Inc. (NYSE:IHO) is a Hunt Valley, Maryland-based triple net healthcare REIT that provides financing, capital and leasing to 69 operators among 862 senior living, skilled nursing and assisted living facilities in 42 States of the United States and the United Kingdom. Omega Healthcare Investors is not involved in the day-to-day management of these establishments, which are managed by the operators.

On March 22, Citigroup analyst Nicholas Joseph upgraded Omega Healthcare from neutral to buy and raised the price target from $32 to $35.

Wells Fargo analyst Connor Siversky also upgraded Omega Healthcare Investors from equal weight to overweight on Feb. 26 and raised the price target from $31 to $35.

Park Hotels & Resorts Inc. (NYSE:PK) is a Tysons, Virginia-based hotel REIT with 43 hotels and resorts with more than 26,000 rooms, located in major U.S. markets from Hawaii to Massachusetts that have high barriers to entry. Park Hotels is a small-cap stock with a market cap of $3.737 billion. Its occupancy rate in the fourth quarter of 2023 was 71%, compared to 69.5% in the fourth quarter of 2022.

Park was established as an independent company in January 2017 following its spin-off from Hilton. In September 2019, Park acquired Chesapeake Lodging Trust to add premium branded hotels and resorts in prime markets such as Miami, Boston, Los Angeles and San Francisco.

On March 22, Citigroup analyst Smedes Rose upgraded Park Hotels & Resorts from neutral to buy and raised the price target from $14 to $20.

Several other analysts have recently published positive ratings on Park Hotels. Truist Securities has a buy and $21 price target and Deutsche Bank has a buy rating and $24 price target on Park.

Tangier Inc. (NYSE:SKT), formerly known as Tanger Factory Outlet Centers Inc., is a Greensboro, North Carolina-based retail REIT that owns 40 indoor outlet malls and outdoor outlet malls with a footprint of 15.6 million square feet and more than 3,000 stores in 20 states and Canada. Tanger Factory Outlet Centers was founded in 1981 and went public in May 1993. Tangier’s occupancy rate at the end of 2023 was 97.3%.

Tangier was the second-largest REIT overall in 2023, with a total return of 63.58%, overcoming the popular notion that in-store retail shopping is in decline due to the popularity of Inc. (NASDAQ:AMZN) and other online retailers. Its total return so far in 2024 is 5.09%.

On February 15, Tangier announced excellent operating results for the fourth quarter. Funds from operations (FFO) of $0.52 exceeded the estimate by $0.50. Revenue of $127.48 million beat the estimate of $119.04 million and was 9.46% higher than Q4 2022 revenue of $116.46 million. Additionally, full-year core FFO was reported in a range of $2.01 to $2.09 per share, with a midpoint above the consensus analyst estimate of 2.03 dollars per share.

On March 22, Citigroup analyst Michael Bilerman upgraded Tanger from neutral to buy and raised the price target from $30 to $33. Tanger continues to perform well and the Citigroup upgrade should also support the share price.

Essential Properties Inc. Real Estate Trust (NYSE:EPRT) is a diversified REIT based in Princeton, New Jersey that owns and manages single-tenant properties with net leases for service-oriented, experience-based businesses. Essential Properties was founded in 2016 and has a market capitalization of $4.4 billion. It has a portfolio of 1,873 properties across 48 states. Its buildings, which have an occupancy rate of 99.8%, have a weighted average lease duration (WALT) of 14 years.

On March 22, Citigroup analyst Nicholas Joseph upgraded Essential Properties from Neutral to Buy and raised the price target from $25 to $28.50. On March 13, B. Riley Securities also reiterated its buy on Essential Properties and raised its price target from $27.50 to $29 per

Total occupancy and rent collection are extremely important aspects of a REIT, and from this perspective, it’s easy to see why analysts have upgraded Essential Properties’ ratings and price targets this month- this.

American houses 4 rent (NYSE:AMH) is a Calabasas, California-based residential REIT that purchases, develops, renovates and leases existing and new single-family homes as rental properties. American Homes 4 Rent was founded in 2012 and in less than 12 years has built a portfolio of 58,470 single-family units in 21 states. Its largest concentration of housing is in the southeastern United States, where population growth has been explosive. Its IPO took place in July 2013.

In the fourth quarter of last year, American Homes 4 Rent had an average days occupied for a single home of 96.2%.

On March 22, Citigroup analyst Nicholas Joseph upgraded American Homes 4 Rent from Neutral to Buy and raised the price target from $37 to $41.

Other analysts have also recently backed American Homes. On March 20, Mizuho analyst Handel St. Juste maintained a buy on U.S. Houses and raised the price target from $37 to $39. On March 12, JMP Securities analyst Aaron Hecht maintained the outperformance of U.S. homes and raised the price target from $38 to $41.

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