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Shares of Lamar Advertising LAMR have rallied 22.2% year to date against its industry’s growth of 11%. Its impressive footprint of outdoor advertising assets across the United States and Canada positions it well to ride the growth curve.
An unmatched logo signs business, a diversified tenant base across various sectors and a focus on local businesses assure stable revenues. Efforts to expand the digital platform and technological advancements in the low-cost, out-of-home (OOH) advertising platform also bode well for long-term growth.
Its second-quarter 2024 results reflected a rise in revenues driven by strength in local and regional sales. Apart from revenue growth, continued cost containment efforts helped LAMR achieve nearly 7% adjusted EBITDA growth and 9.5% AFFO per share growth.
Late in August, Lamar announced a 7.7% sequential hike in its quarterly cash dividend. The company will now pay a dividend of $1.40 per share, up from the $1.30 paid out earlier. The increased dividend will be paid out on Sep. 30 to stockholders of record of the company’s Class A common stock and Class B common stock on Sep. 18, 2024.
Analysts also seem bullish on this Zacks Rank #2 (Buy) company. Over the past two months, the Zacks Consensus Estimate for both 2024 and 2025 funds from operations (FFO) per share has moved north.
Estimate Revision
Factors Behind LAMR Stock Price Surge: Will This Trend Last?
Lamar is one of the largest owners and operators of outdoor advertising structures in the United States. It enjoys an impressive national footprint and holds a leading position as a provider of logo signs in the United States. Lamar also sources a significant part of its revenues from local businesses with a diversified base of tenants. This leads to less volatility in revenues. In the second quarter of 2024, local and regional sales accounted for 79% of the company’s billboard revenues. Moreover, local and regional sales reported growth for the 13th consecutive quarter.
Over recent years, Lamar has made concerted efforts to upgrade its portfolio, increasing occupancy in its existing advertising displays and enabling it to enjoy a significant market share in the U.S. outdoor advertising business. The company's increased focus on bolstering its digital capabilities augurs well for long-term growth.
Given the technological advancements and low-cost nature of out-of-home (OOH) advertising, it has been gaining traction in recent years. Lamar’s strategic acquisitions of outdoor advertising assets in its existing and new markets have been fruitful. It completed 36 acquisitions for a total purchase price of $139 million in 2023. During the first half of 2024, LAMR completed multiple acquisitions for a total cash purchase price of around $28.2 million. With such expansion efforts, it is poised to ride the growth curve.
Lamar has enjoyed historical cash flow growth of 8.25% compared with 2.57% of the industry. As of June 30, 2024, Lamar Advertising had a total liquidity of $744.3 million. This REIT’s trailing 12-month return on equity (ROE) highlights its growth potential. Lamar’s ROE is 42.18% compared with the industry’s average of 3.26%. This reflects that the company reinvests more efficiently compared with the industry.
Solid dividend payouts remain the biggest attraction for REIT investors, and Lamar has been committed to the same. In the last five years, the company has raised its dividend eight times. Its five-year annualized dividend growth rate is 16.50%, which is encouraging. Such efforts raise investors’ optimism about the stock. Check Lamar Advertising’s dividend history here.
Other Stocks to Consider
Some other top-ranked stocks from the REIT sector are Crown Castle Inc. CCI and Cousins Properties CUZ, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Crown Castle’s current-year FFO per share has moved marginally north in the past two months to $6.97.
The Zacks Consensus Estimate for Cousins Properties’ 2024 FFO per share has been raised marginally over the past week to $2.67.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.
Zacks Investment Research
Shares of SL Green Realty SLG have risen 38.5% in the past six months compared with the industry's upside of 17.5%.
Last July, SLG reported a second-quarter 2024 FFO per share of $2.05, which outpaced the Zacks Consensus Estimate of $1.62. Results reflected decent leasing activity in its Manhattan portfolio. SL Green also raised its guidance for 2024 FFO per share.
Analysts seem bullish on this Zacks Rank #3 (Hold) company, with the Zacks Consensus Estimate for its 2024 FFO per share revised upward marginally over the past two months to $7.58.
Factors Behind SLG's Stock Price Surge: Will This Trend Last?
SL Green has a mono-market strategy focus with an enviable footprint in the large and high barrier to enter the New York real estate market. The company is well-positioned to benefit from its well-located properties and the ability to offer top-notch amenities at recently developed office buildings.
Despite the negative effects of the remote-working dynamics that have been hindering the U.S. office real estate sector, SL Green signed 38 office leases for its Manhattan office portfolio, encompassing 420,513 square feet during the second quarter of 2024. With an encouraging office leasing pipeline, the company remains well-positioned to navigate any challenging environment.
SL Green maintains a diversified tenant base to hedge the risk associated with dependency on single-industry tenants. Its largest tenants include renowned firms from different industries. As of June 30, 2024, except for Paramount Global, which accounted for 5.4% of the company’s share of annualized cash rent, no other tenant in SLG’s portfolio accounted for more than 5% of its share of annualized cash rent, including its share of joint venture annualized cash rent. With long-term leases to tenants with a strong credit profile, it is well-poised to generate stable rental revenues over the long term.
SL Green has been following an opportunistic investment policy to enhance its overall portfolio quality. This includes divesting its mature and non-core assets, including residential properties, in a tax-efficient manner and using the proceeds to fund development projects and share buybacks. Such match-funding initiatives indicate the company’s prudent capital-management practices and will relieve pressure from its balance sheet.
Key Risks for SLG
The elevated supply of rental units in some of SLG’s markets and competition from developers, owners and operators of office properties and other commercial real estate are likely to weigh on its pricing power. High interest rates and geographic concentration of assets add to the company’s woes.
Stocks to Consider
Some better-ranked stocks from the REIT sector are Lamar Advertising LAMR and Cousins Properties CUZ,each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Lamar Advertising’s 2024 FFO per share is pegged at $8.09, up 8.30% year over year.
The Zacks Consensus Estimate for Cousins Properties’2024 FFO per share is pegged at $2.66, up 1.53% year over year.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
Zacks Investment Research
Iron Mountain IRM is well-positioned to benefit from a stable and resilient core storage and records management business. The company’s accretive buyouts and expansion efforts toward fast-growing businesses like the data center bode well for growth. However, competition from industry peers is likely to lead to aggressive pricing pressure and lower margins. High interest rates add to its woes.
Last August, Iron Mountain announced the availability of a secure software-as-a-service platform - Iron Mountain InSight Digital Experience Platform. The platform allows customers to access, manage, govern, and monetize both physical and digital information.
Shares of this Zacks Rank #3 (Hold) real estate investment trust (REIT) have rallied 32.6%, outperforming the industry's upside of 20.4% over the past three months.
What’s Aiding IRM?
IRM derives a majority of its revenues from fixed periodic (usually earned monthly) storage rental fees charged to customers based on the volume of their records stored, ensuring a steady stream of recurring revenues. Iron Mountain’sretention rate for its records management business was 92.8% in the second quarter.In the second quarter of 2024, Iron Mountain’s organic storage rental revenues increased 10.1% from the prior year quarter. We estimate a year-over-year increase of 9.6% in storage rental revenues in 2024. For 2025 and 2026, the metric is expected to witness growth of 8.6% and 9.6%, respectively.
Iron Mountain is supplementing its storage segment’s performance with expansion in its faster-growing businesses, most notable being the data center segment. IRM is making organic growth efforts, along with expansion projects and developments. Such moves will enable the company to capitalize on strong demand for connectivity, interconnection and colocation space and drive leasing activity. In the second quarter, IRM attained data center revenue growth of 29.4%.
Iron Mountain has an aggressive expansion strategy, which includes acquisition and development, to supplement organic growth in storage revenues. The company is focusing on capital recycling by monetizing non-core assets and entering into joint ventures and sale-leaseback transactions, using sale proceeds to fund the development pipeline. Such moves highlight the company’s prudent capital management practices and relieve the pressure on its balance sheet.
Iron Mountain had a total liquidity of approximately $2.3 billion as of June 30, 2024, with a net total lease-adjusted leverage of 5.0X, the lowest level since before the company’s REIT conversion in 2014. It had no significant debt maturities until 2027, and 80% of its net debt was fixed. With this, it has ample financial flexibility to meet its near-term debt obligations and other capital commitments while pursuing growth opportunities.
Solid dividend payouts are arguably the biggest enticements for REIT shareholders, and Iron Mountain remains committed to that. In August 2024, concurrent with its second-quarter 2024 earnings release, it announced a 10% hike in its cash dividend to 71.5 cents per share from 65 cents paid out earlier. Given IRM’shealthy operating platform, our year-over-year adjusted AFFO growth projections of 9.8% for 2024, a lower-than-industry payout ratio and a solid financial position, the increased dividend is likely to be sustainable in the forthcoming period.
What’s Hurting IRM?
The records and information management services industry is highly fragmented, with numerous competitors in North America and worldwide. Although Iron Mountain offers compelling products and has a strong market position, the company faces significant competition. This is likely to result in aggressive pricing and keep margins under pressure going forward.
A high interest rate environment is a concern for IRM. The company may find it difficult to purchase or develop real estate with borrowed funds as the costs are likely to remain elevated. As of June 30, 2024, Iron Mountain’s net debt was approximately $12.89 billion. For 2024, our estimate indicates a year-over-year rise of 17.7% in net interest expenses.
Stocks to Consider
Some better-ranked stocks from the broader REIT sector are Cousins Properties CUZ and Lamar Advertising LAMR, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Cousins Properties’ current-year FFO per share has been raised marginally over the past two months to $2.66.
The Zacks Consensus Estimate for Lamar Advertising’s current-year FFO per share has moved northward marginally over the past two months to $8.09.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.V
Zacks Investment Research
American Tower AMT has successfully concluded the sale of all equity interests in its operations in India, referred to as “ATC India” to Data Infrastructure Trust (“DIT”). This Infrastructure Investment Trust is sponsored by an affiliate of Brookfield Asset Management.
AMT’s Transaction Details
The transaction yields total cash proceeds for American Tower of approximately INR 210 billion, or $2.5 billion, based on the exchange rates on Sept. 12, 2024.
This total cash proceeds includes nearly $320 million related to the monetization of optionally converted debentures issued by Vodafone Idea, as well as payments related to ATC India receivables, net of withholding tax. Additionally, around $2.2 billion will be received as final proceeds at the closing of the transaction.
It is expected that these proceeds will be utilized towards the repayment of American Tower's existing indebtedness, including the repayment of the existing term loan in India at the time of closing. No additional proceeds from this transaction are expected.
2024 Outlook Changes for AMT
As a result of the sale, ATC India’s results will now be reported as discontinued operations. Taking into account the contributions from discontinued operations and adjustments for the completion of the transaction, AMT projects that the present outlook midpoints for property revenue and Adjusted EBITDA of $10.83 billion and $7.185 billion, respectively. Furthermore, the AFFO attributable to AMT shareholders per diluted share, which will include contributions from discontinued operations, is anticipated to be $10.48 per share.
The company projects that the property revenue, Adjusted EBITDA from continuing operations and AFFO attributable to AMT common stockholders per share from continuing operations proforma, when adjusted for interest expense savings derived from the utilization of proceeds from the ATC India sale, would amount to $9.92 billion, $6.805 billion and $9.95, respectively, based on annualized effects of these proceeds and the related interest expense savings.
Wrapping Up
The sale of India operations enables the company to explore new investment opportunities and provides financial flexibility in the United States & Canada, Asia-Pacific, Africa, Europe and Latin America. Hence, with such portfolio restructuring moves, American Tower seems well-poised to prosper alongside strengthening its capital position.
Over the past six months, shares of this Zacks Rank #3 (Hold) company have rallied 19% compared with the industry’s growth of 15.9%.
Stocks to Consider
Some better-ranked stocks from the broader REIT sector are Cousins Properties CUZ and Lamar Advertising LAMR, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Cousins Properties’ 2024 FFO per share has moved marginally northward over the past two months to $2.66.
The Zacks Consensus Estimate for Lamar Advertising’s current-year FFO per share has been raised marginally over the past two months to $8.09.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
Zacks Investment Research
Prologis PLD is well-poised to benefit from its portfolio of strategically located modern logistics facilities in some of the world’s busiest distribution markets and substantial scale. Strategic buyouts and development activities appear promising. A solid balance sheet aids its growth endeavors.
However, the choppiness in the industrial real estate market and subdued demand remain a concern for Prologis. High borrowing expenses amid elevated interest rates add to its woes.
What’s Aiding Prologis?
Prologis provides logistics real estate in some of the busiest distribution markets across the globe. The properties of the company are typically located in large, supply-constrained infill markets near airports, seaports and ground transportation facilities, which facilitates rapid distribution of customers’ products. The solid demand for Prologis’ strategically located facilities is a key driving force for its healthy operating performance.
Despite the slowdown in the industrial real estate market, the average occupancy level in Prologis’ owned and managed portfolio was 96.1% in the second quarter. For 2024, management has maintained its previous guidance range for average occupancy in the band of 95.75-96.75%. We estimate occupancy to be 96.3%.
Prologis continues to bolster its presence in high-barrier, high-growth markets through strategic acquisitions and development activities. Its investments over the years comprise a wide array, including the largest M&A transactions in the real estate sector and individual off-market deals below $5 million. For 2024, the company anticipates acquisitions at Prologis share between $1.0 and $1.5 billion and development starts in the range of $2.5-$3.0 billion.
Prologis maintains a healthy balance sheet position with ample flexibility. As of June 30, 2024, this industrial REIT had a total available liquidity of $6.45 billion. The company's weighted average interest rate on its share of the total debt was 3.1%, with a weighted average term of 9.3 years. The company’s credit ratings as of June 30, 2024 were A3 (Outlook Positive) from Moody’s and A (Outlook Stable) from Standard & Poor’s, enabling PLD to borrow at an advantageous rate. Given its balance sheet strength and prudent financial management, the company is well-poised to capitalize on long-term growth opportunities.
Solid dividend payouts are arguably the biggest enticements for REIT shareholders, and Prologis is committed to that. In the last five years, Prologis has increased its dividend five times, and its five-year annualized dividend growth rate is 14.31%. Given the company’s solid operating platform, opportunities for growth, a decent financial position compared with the industry, this dividend rate is expected to be sustainable over the near term. Check Prologis’ dividend history here.
What’s Hurting Prologis?
In a volatile and persistently high interest rate environment and geopolitical concerns, customers remain focused on cost controls and delaying their decisions concerning decision-making for leasing. As such, demand remains subdued, and this trend is expected to continue in the near term.
Recovery in the industrial market has continued for long, and the growth of e-commerce sales is likely to stabilize to some extent in the upcoming quarters. Any robust performance is unlikely in the near term.
A high interest rate environment implies high borrowing costs for the company, affecting its ability to purchase or develop real estate. PLD’s consolidated debt as of June 30, 2024 was $29.9 billion. For 2024, our estimate indicates a 12.2% year-over-year increase in the company’s interest expenses.
Shares of Prologis have rallied 16% over the past three months, underperforming the industry’s growth of 18.8%. PLD currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks from the REIT sector are Cousins Properties CUZ and Lamar Advertising LAMR, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Cousins Properties’ 2024 FFO per share has been raised marginally over the past two months to $2.66.
The Zacks Consensus Estimate for Lamar Advertising’s current-year FFO per share has moved marginally north in the past two months to $8.09.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Zacks Investment Research
OUTFRONT Media OUT is well-poised to benefit from its diversified portfolio of advertising sites, both geographical and industry-wise, in the key markets of the United States. Strategic investments and expansion efforts to enhance its digital billboard portfolio augur well for its long-term growth opportunities. However, competition from other advertising channels and elevated expenses are worrisome for the company. A high interest rate environment adds to its concerns.
What’s Aiding OUTFRONT Media?
OUTFRONT Media’s advertising sites are geographically diversified, with a presence across the largest markets in the United States. The large-scale presence enables its clients to reach a national audience and also provides the flexibility to tailor campaigns to specific regions or markets. The company’s portfolio is diversified industry-wise. The diversification makes its revenues less volatile in nature. We estimate a year-over-year increase of 1.2% in its total revenues for 2024.
OUTFRONT Media has been making strategic investments in its digital billboard portfolio over the years, and these investments have started reaping benefits. Its total digital billboard displays reached 1,906 at the end of the second quarter of 2024. OUTFRONT Media has been making efforts to convert its business from traditional static billboard advertising to digital displays, which are helping expand the number of new advertising relationships and providing scope to boost digital revenues. We estimate a year-over-year increase of nearly 1% in billboard revenues in 2024.
To enhance its portfolio, OUTFRONT Media has also capitalized on acquisitions. In the first half of 2024, the company acquired several assets for approximately $7.6 million. In 2023, the company acquired several assets for around $33.7 million. Moreover, in 2022, it completed acquisitions worth $353.9 million. With such expansion efforts, the company remains poised to grow over the long term.
Moreover, given the technological advancements and low-cost nature of out-of-home (OOH) advertising compared with other forms of media, OUT has been growing at a rapid pace and continues to increase its market share. In the upcoming years, higher technology investments are expected to provide support to OOH advertising. OUTFRONT Media’s efforts to provide a unique technology platform for marketers to tap into growth opportunities bode well.
Over the past three months, shares of this Zacks Rank #3 (Hold) company have risen 20.7%, outperforming its industry’s growth of 18.4%.
What’s Hurting OUTFRONT Media?
OUTFRONT Media’s revenues and operating results are sensitive to fluctuations in advertising expenditures, general economic conditions and other unexpected external events. Given the slowdown in the economy, we expect the top-line growth to be affected to some extent in the near term. With respect to increasing the number of digital displays in its portfolio, the company expects to incur significant equipment deployment costs and capital expenditures in the upcoming years.
A high interest rate environment is likely to keep borrowing costs elevated for OUTFRONT Media, affecting its ability to purchase or develop real estate. Its total debt as of June 30, 2024 was $2.51 billion. We expect a year-over-year increase of 1.2% in the company’s net interest expenses in 2024.
OUTFRONT Media faces competition from other outdoor advertisers for customers, display locations and structures. It also competes with other media, including conventional platforms such as television, radio, print media, direct mail marketers and online, mobile and social media platforms. This is likely to weigh on the company’s pricing power in the market, affecting profitability.
Stocks to Consider
Some better-ranked stocks from the REIT sector are Cousins Properties CUZ and Lamar Advertising LAMR, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Cousins Properties’ 2024 FFO per share has been raised marginally over the past two months to $2.66.
The Zacks Consensus Estimate for Lamar Advertising’s current-year FFO per share has moved marginally north in the past two months to $8.09.
Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.
Zacks Investment Research
Ventas’ VTR senior housing operating portfolio (SHOP) is likely to benefit from the aging population and the rising healthcare expenditures by senior citizens. Its outpatient medical and research portfolio is expected to gain from the favorable outpatient visit trends and the rising need for research related to life-saving vaccines and therapeutics. A healthy balance sheet position is likely to support its growth endeavors. However, dependence on few tenants and high interest rates add to its concern.
Last August, VTR reported its second-quarter 2024 normalized FFO per share of 80 cents, which surpassed the Zacks Consensus Estimate of 79 cents. Results reflected growth in occupancy in the SHOP same-store portfolio, contributing to higher revenue generation. The company also provided an improved outlook for 2024.
Shares of this healthcare real estate investment trust (REIT), carrying a Zacks Rank #3 (Hold), have rallied 31.9% over the past three months, outperforming the industry's upside of 18.9%.
What’s Aiding Ventas?
Per the company’s second-quarter 2024 earnings presentation, the U.S. population aged 80 years and above is expected to grow by more than 24% in the next five years.This age cohort constitutes a major customer base of healthcare services and incurs higher healthcare expenditures than the average population, poising Ventas’ SHOP portfolio well to capitalize on this positive trend.
Ventas is focused on its "Right Market, Right Asset, Right Operator" strategy, enhancing its portfolio quality and operator diversification and increasing its SHOP scale. The company expects favorable supply-demand fundamentals, its well-invested properties and operators supported by its Ventas OI platform to drive growth. Ventas expects its SHOP segment's same-store cash NOI to grow between 13% and 16% in 2024.
Ventas is carrying out accretive investments to enhance its research portfolio, which is essential for the delivery of crucial healthcare services and research related to life-saving vaccines and therapeutics. Its outpatient medical and research (OM&R) assets are aligned with institutional demand with several top-tier research universities and credit tenancy.
With top-rated tenants and long-lease terms, its high-quality portfolio assures steady growth in cash flows. In the OM&R portfolio, Ventas generated more than 3% same-store cash NOI growth in the second quarter of 2024 with strong margins and stable occupancy. Ventas expects the OM&R portfolio's same-store cash NOI to grow in the range of 2.75-3.25% in 2024.
Ventas maintains a healthy balance sheet. It has been making efforts to enhance its liquidity position and financial strength. As of June 30, 2024, the company had approximately $3.3 billion of liquidity and a net debt to further adjusted EBITDA of 6.4X. It has also substantially cleared 2024 debt maturities. Its access to diverse capital sources through capital recycling, third party (VIM), on-balance sheet financing and internal cash flow provides ample financial flexibility and is likely to support its growth endeavors.
What’s Hurting Ventas?
Ventas also faces tenant concentration risk in its triple-net leased property segment. The properties leased to Brookdale Senior Living, Ardent and Kindred accounted for 7.2%, 6.6% and 6.6% of Ventas’ total NOI, respectively, in the second quarter of 2024. In case of no lease renewal, change in lease agreements or any adverse development for these three tenants, Ventas’ financial condition and results are likely to be impacted.
A high interest rate environment is a concern for Ventas. Elevated rates imply high borrowing costs for the company, which would affect its ability to purchase or develop real estate. The company has a substantial debt burden, and its total debt as of June 30, 2024 was approximately $13.18 billion. Moreover, with high interest rates still in place, the dividend payout might seem less attractive than the yields on fixed-income and money market accounts.
Stocks to Consider
Some better-ranked stocks from the broader REIT sector are Cousins Properties CUZ and Lamar Advertising LAMR, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Cousins Properties’ current-year FFO per share has been raised marginally over the past two months to $2.66.
The Zacks Consensus Estimate for Lamar Advertising’s current-year FFO per share has moved northward marginally over the past two months to $8.09.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
Zacks Investment Research
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