CUZ - Office REITs preview: Hudson Pacific upgraded at Mizuho on better risk-reward
2023-10-18 10:11:24 ET
Hudson Pacific Properties ( NYSE: HPP ) was upgraded to Neutral from Underperform at Mizuho Securities in a Q3 earnings preview note, citing a better risk-reward.
Vikram Malhotra, managing director at Mizuho, noted that "several negatives are balanced by potential improvement in San Francisco fundamentals, progress on the actors' strike during the next 3-6 months, and actions to shore up the balance sheet."
The negatives include tenant move-outs, an uncertain Studio business trajectory and financial covenant concerns.
Mizuho's FY23 FFO estimate for Hudson ( HPP ) were cut to $1.05 from $1.24 on lower near-term studio revenue, higher interest expenses and slightly lower office rental income. Consensus estimate is $1.05.
FY24 FFO estimate was $1.45, compared to $1.47 consensus. HPP's price target was cut to $7 from $10, implying 20.3% potential up/downside to its last close.
Mizuho also revised its PTs and FFO estimates for the following office REITs:
| Ticker |
| Rating |
| New PT |
| Old PT |
| Upside/ downside |
| New 2023E FFO |
| Old 2023E FFO |
| Rationale |
| BXP |
| Buy |
| $68 |
| $85 |
| +16.9% |
| $7.25 |
| $7.21 |
| Higher occupancy |
| CUZ |
| Underperform |
| $19 |
| $22 |
| -4.2% |
| $2.61 |
| $2.56 |
| Disposition timing |
| HIW |
| Neutral |
| $24 |
| $31 |
| +19% |
| $3.76 |
| $3.84 |
| Move out impact |
| KRC |
| Buy |
| $40 |
| $48 |
| +28.6% |
| $4.54 |
| $4.56 |
| Lower occupancy |
| PGRE |
| Buy |
| $6 |
| $7 |
| +25% |
| $0.86 |
| $0.90 |
| Move out impact |
| SLG |
| Neutral |
| $38 |
| $38 |
| +4.8% |
| $5.51 |
| $5.37 |
| Disposition timing/lower debt |
| VNO |
| Neutral |
| $23 |
| $23 |
| +2.7% |
| $2.68 |
| $2.72 |
| Slow lease- up recognition |
More on office REITs
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- Highwoods Properties: Likely To Remain Stagnant
- Cousins Properties: Good Company In A Troubled Sector
- 7% Yield, Mounting Risks - Closer Look At Boston Properties
- Office Real Estate: Why Kilroy Realty Is My Go-To Recovery Play
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Office REITs preview: Hudson Pacific upgraded at Mizuho on better risk-reward