Excel Trust, Inc. , a real estate investment trust (REIT) primarily focusing on retail assets, has recently executed a stock repurchase program to facilitate a selective purchase of its common stock over a given time period.
The strategic move is aimed at capitalizing on the current market fundamentals by mopping out some of the common stock of the company at a relatively low price, as the shares are presently undervalued due to uncertain market sentiments.
In concurrence with the share repurchase program, Excel Trust would be entitled to acquire up to $30 million worth of its common stock in the open market and negotiated purchases. At present, the company has approximately 31 million of common stock outstanding.
Excel Trust has historically purchased properties opportunistically at significantly low prices and sold them at a comparatively higher price at a later stage to profit from the price differential during this holding period. Given the present dislocations in the market, management felt that buying common shares at a low price would be one of the best investment alternatives for the company.
Since its inception, Excel Trust has grown its portfolio through strategic acquisitions to a gross asset value of approximately $500 million. The company targets high-quality regional community centers and neighborhood grocery-anchored centers, primarily anchored by leading retailers of the country. Excel Trust usually enters into long-term leases with its tenants, which insulate it from short-term market volatility.
Unlike larger retail REITs that focus on densely populated trade areas, Excel Trust has followed a mid-market model, scurrying to own some very attractive mid-tier shopping centers in both primary and secondary markets. The company has acquired properties in diverse markets such as Scottsdale, Arizona, Northern California and Washington, D.C.
We currently have an Underperform recommendation and a Zacks #4 Rank for Excel Trust, which translates into a short-term Sell recommendation and indicates that the stock is expected to perform well below the overall U.S. equity market for the next 1–3 months. However, we have a Neutral recommendation and a Zacks #3 Rank (short-term Hold) for Developers Diversified Realty Corp. (DDR - Analyst Report), one of the peers of Excel Trust.