On Apr 16, Zacks Investment Research downgraded Liberty Property Trust LPT to a Zacks Rank #4 (Sell).
Why the Downgrade?
In recent times, Liberty Property has been repositioning its portfolio with increased focus on industrial properties. But with the industrial market witnessing a protracted recovery, the demand for industrial space has become restrained. This reduces the chances of any striking decrease in the available space. As a result, we do not expect any robust improvement in Liberty Property’s performance.
Liberty Property has high exposure to office assets. As of Dec 31, 2014, around 15.3% of the company’s total wholly owned properties were office assets. Demand for office properties is highly correlated to job growth, and currently, consistent office space efficiency trends limit the scope for any solid recovery in the office sector fundamentals. This could affect the company’s top-line growth in the near term.
However, Liberty Property is specifically focused on multi-tenant properties that have strong demographic and economic fundamentals. Further, the company boasts diversified office properties situated mainly across Metro Philadelphia, Washington D.C. and certain Sunbelt cities, which promise steady rental revenue, going forward.
Nevertheless, over the past 7 days, the Zacks Consensus Estimates for both 2015 and 2016 have remained unchanged at $2.60 and $2.66 per share, respectively.
Investors interested in the REIT sector may consider stocks like Ashford Hospitality Trust, Inc. AHT, Ryman Hospitality Properties, Inc. RHP and Gladstone Land Corporation LAND. All these stocks sport a Zacks Rank #1 (Strong Buy).
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