Why Armada Hoffler Properties (AHH) is a Good Pick Now?
Amid global headwinds, the slowdown in China’s economy, uncertainties related to the rate hike by the Federal Reserve and several positive economic reports, it seems to be a good time to add Armada Hoffler Properties, Inc. AHH to your portfolio right now.
This is because this real estate investment trust (REIT) recently closed the acquisition of Providence Plaza in Charlotte, NC for $26.2 million, and continues to reflect strength in several areas.
How Will the Acquisition Benefit Armada Hoffler?
As far as the recent acquisition is concerned, we note that Providence Plaza, a 103,000-square-foot mixed-use asset built in 2008 and comprising three buildings, is in demand, as evident from its high occupancy level (97%).
The acquisition allows the company to leverage fundamentals of the office market and retail real estate market as the property includes 54,000 square feet of office space, 49,000 square feet of retail space, and a two-floor parking garage with 256 spaces. The property has value-added potentials as well with an undeveloped tract of land of around one acre that is designated for multifamily development.
Most importantly, however, the Providence Plaza acquisition gives Armada Hoffler the opportunity to foray into the Charlotte market and specifically, the SouthPark submarket. This market has solid trade area strength, with average household income in the immediate surrounding of the acquired asset exceeding $145,000 per year.
What Makes Armada an Overall Attractive Pick?
Besides the perks of the recent acquisition, Armada Hoffler has strength in several areas.
The company boasts of 5-year historical sales growth of 26.1%. Moreover, its projected sales growth (F1/F0) of 25.2%, as against the industry average growth rate of 6.93%, promises continuation of the upward revenue trend.
Moreover, Armada Hoffler posted a 14.29% earnings surprise in the last reported quarter and has exceeded estimates in three out of last four quarters with an average earnings beat of 9.01%.
The stock has been seeing solid estimate revisions as well. In the past 30 days, the Zacks Consensus Estimate for 2015 earnings rose 4.6% to 91 cents, while that for 2016 increased 2.1% to 98 cents.
We also note that a positive Earnings ESP of 4.35% and the company’s Zacks Rank #2 (Buy) conclusively show that Armada Hoffler is likely to beat the Zacks Consensus Estimate in the upcoming quarter.
Other stocks in the REIT industry worth considering include Silver Bay Realty Trust Corp. SBY, Spirit Realty Capital, Inc. SRC and Sun Communities Inc. SUI. All these stocks hold the same rank as Armada Hoffler.
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SUN CMNTYS INC (SUI): Free Stock Analysis Report
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