Simon Property: "We are moving from Neutral to Buy on Simon given the company’s opportunity to boost external growth (and improve SPG’s core U.S. portfolio) as they prepare to become a major player in the emerging “M&A” market in U.S. retail real estate. We are modeling acquisitions of $1 billion in ’10 at an 8.5% cap rates. These new assumptions take our ’10 estimate from $5.75 to $5.95."Likely much more coming over the next week as economic fundamentals and beta underperformance over the past 2 months has drastically changed the prospects for REITs.
Federal Realty: "Quality premium justifies Neutral rating. We are upgrading Federal Realty from Underperform to Neutral due to the fact the stock’s premium relative to its peers (on a price-to-FFO multiple basis) has contracted from 42% to 26% during the beta rally. [TD: upgrade on underperformance vs peers based on beta, not on fundamentals... fucking brilliant].
Developers Diversified: "Maintain Neutral, raising price objective. We are raising our DDR PO from $3.50 to $5.00 based on a higher forward NAV (from $3.76 to $4.84), and a modest reduction in our price objective’s discount to that forward NAV (was 5% is now 0%). We are also raising our ’10 FFO per share estimate from $1.44 to $1.59, to reflect the reduction in dilution given the issuance of fewer shares at the stock’s current price. [Give it 2 weeks until ML does another follow on here].
Taubman Centers: "Maintain Neutral, raising price objective [take DDR template, change name of company, recycle everything else]. We believe that Taubman is positioned with a solid balance sheet and has better than average liquidity than many of its retail REIT peers."
All in all, a nice preamble for SPG to raise yet another round (2nf, 3rd, 9th - I have lost track at this point) of equity, compliments of the ever gregarious with other people's money Merrill Lynch sales/trading desk. Sphere: Related Content
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