Brixmor Is Poised To Profit - 6.1% Yield And 30% UpsideSummaryWe are up 32% since the start of the year on Brixmor, and yet it remains incredibly cheap.Grocery store anchored, value-oriented shopping centers are mostly protected from the growth of e-commerce.The balance sheet allows for great flexibly while the company improves its asset base to create lasting value to shareholders.The company is aggressively buying back shares, and we expect at least 30% upside as the company keeps posting positive growth.The 6.1% dividend yield is very safely covered at a 59% payout ratio and expected to keep growing at a mid-single digit rate in the long run.Read on:https://seekingalpha.com/article/4288030-brixmor-poised-prof...DavidLong BRX and KIM
In all fairness, the author could have provided a broader picture showing brx at the same price as October 2017.
Compared to some of the SA articles it is not bad. I may quibble with couple of points: On balance sheet, BRX primary approach is refinance the debt to reduce the cost and elongate maturities. The debt reduction has been done with last year disposition, but going forward the dispositions are primarily to pay for the redevelopment and acquisitions. The redevelopments are now mostly funded by cash, meaning BRX is not taking additional debt, and as those developments generate income, the EBITDA/debt ratio's get better. That's their balance sheet. But they are not really reducing the debt, nor planning to use the debt, also they are mindful or maintaining the EBITDA/ debt ratio and improve it. I am not sure the author gets this pointOn buybacks, they are not aggressive at all. In fact, they are limited in the buyback, read my comment about not taking additional debt and the funding need for redevelopment. So, primarily the excess cash flow and dispositions are going to fund the redevelopment and any acquisitions.Also, the free cash flow calculation is incorrect. What often many folks don't take into account is, there is a maintenance cap-ex. The FFO adds D&A to the income but the maintenance cap-ex is something that REIT has to make and for that they have to spend the cash. So for BRX it is typically around $35m give or take few millions.Separately, in another conversation someone mentioned that REIT's paying 85% of FFO is normal, but such payout's often either starve maintenance cap-ex or they take on leverage.
Unless you have been holding BRX before 2017 it is not relevant. However, what is important is, the asset profile of BRX from Oct 2017 to now has improved, their NAV has improved. More importantly BRX is at a trajectory where they can increase income and reduce EBITDA/debt ratio and that should allow cap-rate compression.
Points well made, thank you, you usually have a professional manner of evaluating companies. I have long term holdings in roic & uba, newer holding in kim. Tempting to buy brx, wonder when enough is enough, don't want to sell current holdings as they're in a taxable account with actual profits. Still, 6+% yield in a low yield world is very attractive, plus the possible gain in value.
Coastal“Tempting to buy brx”Why not look at a thriving, possibly best run mall in the country yielding 5.6%——-spg?
I own BRX and have considered buying more.However when I checked ownership data on the M site I found that both Fidelity and Cohen and Steers have been sellers.I am not selling what I own but I am not going to buy more.Martin
Martin,The CEO bought 7500 shares @$18.5 open market purchase on 8/16/2019. Don't you think that is bullish?
I owned spg for several years until selling late spring. I would purchase again on a substantial pullback, but it matters not that I believe spg will transform into a continued viable operation if the market forces don’t “get it”.
It is certainly not a negative
I hear you. I don't want to read too much into insider purchases either. But a CEO buying at these prices, lot closer to 52 week high should be seen as not defending the stock price but as optimism. Separately, I think BRX is at an inflection point, where they could increase FFO, improve the EBITDA/debt and that could lead to multiples expansion or to peer multiples. I may even make BRX as 10% of my total portfolio, if the stock goes down significantly due to volatility.
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