Credit: Shutterstock photoCamden Property TrustCPT recently acquired a 358-home apartment community in the Tampa/St. Petersburg neighborhood. The company shelled out approximately $127 million, after closing cost, for this purchase. This buyout will enable the residential real estate investment trust (REIT) to strengthen its foothold in the core market.
The Florida community was constructed in 2016 and was previously known as AER Luxury Apartments. This 18-story residential tower is strategically located in close proximity to several downtown office buildings, waterfront districts and entertainment centers. Given its convenient location, the property will likely enjoy high demand and occupancy.
The ultra-luxury residential property, which will be renamed Camden Pier District, is equipped with ample ground floor amenities and an extensive rooftop. In addition, the community offers a 5-story parking garage and a retail space.
Per management, this prime property was attractively priced 5-10% lower than its current replacement cost. Further, management anticipates to complete lease-up later in 2018. It also expects the property to churn a yield of around 5% in the first full year of stabilization.
Shares of the company have outperformed the industry in the past year. While the stock has gained 2.6%, the industry has declined 5.2% during the same time period.
Although such prime asset buyouts will enhance the company's overall asset quality, its performance in the near term will likely be marred due to new supplies in the core markets. In fact, management predicts supply to peak in 2018. This will hinder the apartment operator's ability to retain and attract tenants at higher rents.
Camden Property currently carries a Zacks Rank #4 (Sell).
Better-ranked stocks in the REIT space include New Senior Investment Group SNR , NexPoint Residential Trust NXRT and Select Income REIT SIR . All three carry a Zacks Rank of 2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
New Senior Investment's Zacks Consensus Estimates for fourth-quarter 2017 funds from operations (FFO) per share remained unchanged at 28 cents over the past month. Its shares have lost 5.1% in a month's time.
NexPoint's Zacks Consensus Estimate for the fourth-quarter FFO has remained unchanged at 37 cents in a month's time. Also, its shares have gained 14.8% over the past year.
Select Income's FFO per share estimates for fourth-quarter 2017 remained unchanged at 70 cents over the past month. The stock has lost 12% over the past year.
Note: All EPS numbers presented in this report represent funds from operations (FFO) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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Camden Property Trust (CPT): Free Stock Analysis Report
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NexPoint Residential Trust, Inc. (NXRT): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
