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Realty Income's Senior Unsecured Rating Upgraded by Moody's
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Ushering in good news for shareholders of Realty Income (O - Free Report) , Moody's Investors Service recently upgraded the company’s senior unsecured rating to A3 from Baa1. The outlook is stable.
Per the rating agency, this move highlights Realty Income’s efficiency in maintaining conservative balance sheet metrics for a long time as well as ability to get financing for long-term at low costs. The rating agency also acknowledged the REIT’s geographically diverse net-lease retail portfolio that has been able to deliver steady performance throughout the real estate cycles. The depth and experience of management team has also been recognized by the rating agency.
Further, the rating agency anticipates Realty Income to grow in a disciplined fashion without negotiating financial flexibility and leverage. It also expects management to keep up the solid operating performance backed by high occupancy levels and strong earnings growth. Notably, this is reflected by the company’s stable outlook.
The rating upgrade enhances its creditworthiness in the market and is likely to boost investors’ confidence in the stock. In fact, such moves provide companies an opportunity to enjoy reduced costs on debts and better access to capital.
Notably, this freestanding retail REIT derives more than 90% of its annualized retail rental revenues from tenants belonging to service, non-discretionary and low-price retail business. Such businesses are less susceptible to economic recessions, as well as competition from Internet retailing. The company also enjoys high occupancy levels consistently.
However, substantial exposure to single-tenant assets raises risks associated with tenant default. Further, generation of notable rental revenues from assets leased to drug stores and rate hikes add to woes.
Realty Income currently carries a Zacks Rank #3 (Hold). Over the past month, shares of the company have climbed 1.9%, outperforming 0.3% growth recorded by the industry.
Cedar Realty’s FFO per share estimates for 2017 remained unchanged at 54 cents over a month. Its share price has increased 18.0% in the past six months.
DCT Industrial Trust’s current-year FFO per share estimates have been revised upward by a cent to $2.44 in a month’s time. Its share price has increased 16.3% in the past six months.
Extra Space Storage’s 2017 FFO per share estimates have climbed 0.2% to $4.31 in a month’s time. Its share price has increased 12.6% in the past six months.
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.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Realty Income's Senior Unsecured Rating Upgraded by Moody's
Ushering in good news for shareholders of Realty Income (O - Free Report) , Moody's Investors Service recently upgraded the company’s senior unsecured rating to A3 from Baa1. The outlook is stable.
Per the rating agency, this move highlights Realty Income’s efficiency in maintaining conservative balance sheet metrics for a long time as well as ability to get financing for long-term at low costs. The rating agency also acknowledged the REIT’s geographically diverse net-lease retail portfolio that has been able to deliver steady performance throughout the real estate cycles. The depth and experience of management team has also been recognized by the rating agency.
Further, the rating agency anticipates Realty Income to grow in a disciplined fashion without negotiating financial flexibility and leverage. It also expects management to keep up the solid operating performance backed by high occupancy levels and strong earnings growth. Notably, this is reflected by the company’s stable outlook.
The rating upgrade enhances its creditworthiness in the market and is likely to boost investors’ confidence in the stock. In fact, such moves provide companies an opportunity to enjoy reduced costs on debts and better access to capital.
Notably, this freestanding retail REIT derives more than 90% of its annualized retail rental revenues from tenants belonging to service, non-discretionary and low-price retail business. Such businesses are less susceptible to economic recessions, as well as competition from Internet retailing. The company also enjoys high occupancy levels consistently.
However, substantial exposure to single-tenant assets raises risks associated with tenant default. Further, generation of notable rental revenues from assets leased to drug stores and rate hikes add to woes.
Realty Income currently carries a Zacks Rank #3 (Hold). Over the past month, shares of the company have climbed 1.9%, outperforming 0.3% growth recorded by the industry.
Stocks to Consider
Some better-ranked stocks in the REIT space are Cedar Realty Trust , DCT Industrial Trust and Extra Space Storage (EXR - Free Report) . Each of these stocks carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cedar Realty’s FFO per share estimates for 2017 remained unchanged at 54 cents over a month. Its share price has increased 18.0% in the past six months.
DCT Industrial Trust’s current-year FFO per share estimates have been revised upward by a cent to $2.44 in a month’s time. Its share price has increased 16.3% in the past six months.
Extra Space Storage’s 2017 FFO per share estimates have climbed 0.2% to $4.31 in a month’s time. Its share price has increased 12.6% in the past six months.
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.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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