In a report published Thursday, Stifel analyst John Guinee upgraded the rating on CommonWealth REIT (NYSE: CWH) from Hold to Buy, and named a $28.50 price target.
In the report, Stifel noted, “We are upgrading CommonWealth REIT to Buy from Hold as 1) the $705mm of proceeds from the sale of its 22mm share ownership interest in Select Income REIT (SIR, N/R, $29.98) provides an immediate 500 bp deleveraging opportunity by paying down the $735mm outstanding (as of 1Q14) on its term loan and revolver, 2) if our assumptions about the new management's strategy are correct (see below), we believe REIT-dedicated interest will return for this long-sidelined name, 3) we view the naming of Adam Markman, formerly of Green Street Advisors, to CFO as a positive, 4) compressing cap rates for B and C quality assets in primary and A and B assets in secondary submarkets are a positive for an asset sales strategy, and 5) we also believe the recent sell-off in shares creates an attractive entry point.”
CommonWealth REIT closed on Wednesday at 25.91.
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