Select Income REIT’s (SIR) Buy Rating Reaffirmed at FBR & Co

FBR & Co reiterated their buy rating on shares of Select Income REIT (NASDAQ:SIR) in a report issued on Friday. The firm currently has a $34.00 price objective on the real estate investment trust’s stock.

“Select Income REIT posted mostly in-line 3Q17 results that were only slightly mixed versus estimates. Adjusted EBITDA increased 2.8% to $85.7 million, a beat compared to our estimate of $85.4 million and consensus estimate of $85.3 million. Normalized FFO per diluted share came in at $0.68, just missing ours and consensus estimate of $0.69. The key reason for the FFO/share differential was higher interest expense ($24.4 million) than our estimate ($23.4 million). Occupancy was a very healthy 96.2%, above our estimate of 96.1% and 2Q17 occupancy of 95.9%. In short, SIR delivered a solid quarter and investors, in our view, should be more constructive on the shares given that management continues to deliver stable results, a very attractive (and well covered) $2.04/share dividend (8.5% yield), and SIR remains investment-grade rated. We continue to believe investors are missing the evidence that ~37% of the SIR portfolio is comprised of industrial assets, which trade at a materially higher multiple (~23.8x 2017E EBITDA) than office (~17.0x) and SIR, now at 13.5x. Although the shares traded well on Friday (+4.0%), we think a potential spin-off of the industrial assets could yield material shareholder gains.”,” FBR & Co’s analyst wrote.

Other research analysts have also issued research reports about the stock. Zacks Investment Research raised shares of Select Income REIT from a sell rating to a hold rating in a research note on Tuesday, September 5th. BidaskClub raised shares of Select Income REIT from a hold rating to a buy rating in a research note on Friday, October 13th. Finally, Deutsche Bank AG lifted their price objective on shares of Select Income REIT from $5.00 to $5.50 and gave the stock a hold rating in a research note on Thursday, October 26th.

Shares of Select Income REIT (NASDAQ SIR) opened at 23.94 on Friday. Select Income REIT has a 12 month low of $22.51 and a 12 month high of $26.79.

Select Income REIT (NASDAQ:SIR) last released its quarterly earnings data on Friday, October 27th. The real estate investment trust reported $0.68 earnings per share for the quarter, missing the consensus estimate of $0.69 by ($0.01). Select Income REIT had a return on equity of 4.34% and a net margin of 19.15%. The firm had revenue of $118.01 million for the quarter, compared to the consensus estimate of $116.73 million. During the same period in the previous year, the business earned $0.69 EPS. The firm’s revenue was up 2.6% compared to the same quarter last year. Analysts expect that Select Income REIT will post $0.99 earnings per share for the current year.

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The company also recently disclosed a quarterly dividend, which will be paid on Thursday, November 16th. Investors of record on Monday, October 23rd will be paid a dividend of $0.51 per share. This represents a $2.04 annualized dividend and a yield of 8.52%. The ex-dividend date of this dividend is Friday, October 20th. Select Income REIT’s payout ratio is 204.00%.

Institutional investors have recently added to or reduced their stakes in the stock. Sei Investments Co. boosted its stake in Select Income REIT by 3,984.2% during the 2nd quarter. Sei Investments Co. now owns 4,125 shares of the real estate investment trust’s stock worth $100,000 after acquiring an additional 4,024 shares during the last quarter. Zurcher Kantonalbank Zurich Cantonalbank boosted its stake in Select Income REIT by 15.3% during the 2nd quarter. Zurcher Kantonalbank Zurich Cantonalbank now owns 4,343 shares of the real estate investment trust’s stock worth $104,000 after acquiring an additional 575 shares during the last quarter. Nisa Investment Advisors LLC bought a new position in Select Income REIT during the 2nd quarter worth approximately $123,000. New York State Teachers Retirement System bought a new position in Select Income REIT during the 1st quarter worth approximately $142,000. Finally, Daiwa Securities Group Inc. boosted its stake in Select Income REIT by 13.7% during the 2nd quarter. Daiwa Securities Group Inc. now owns 5,800 shares of the real estate investment trust’s stock worth $139,000 after acquiring an additional 700 shares during the last quarter. 48.28% of the stock is currently owned by institutional investors and hedge funds.

Select Income REIT Company Profile

Select Income REIT is a real estate investment trust. The Company is engaged in the ownership of properties that include buildings and leased industrial lands that are primarily net leased to single tenants. As of December 31, 2016, the Company owned 121 properties (362 buildings, leasable land parcels and easements) with approximately 44.8 million rentable square feet.

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