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American Assets Trust Inks Deal to Acquire San Diego Asset

Zacks Equity Research

American Assets Trust, Inc. AAT has entered into a deal to acquire the Pacific Ridge Apartments in San Diego, CA, for around $232 million. The move is in sync with the company’s strategic expansion efforts. The purchase price will be funded with a combination of cash on hand and funds drawn against its existing credit facility.

The above mentioned 533 unit luxury apartment community, which was completed in 2013, is centrally located in San Diego. It enjoys solid access to public transportation, as well as notable places such as the San Diego International Airport, Zoo, malls, culinary points and universities. This increases the demand for the property as evident from the fact that it is currently around 97% leased.

Notably, American Assets Trust has substantially increased its Net Asset Value since its IPO in 2011, through disciplined accretive acquisitions, increased occupancy and strong same store net operating (NOI) growth.

The company has an experience of over 50 years in acquisition, development and management of premier retail, office, and residential properties in the nation. Its diversified asset base help in mitigating the risks associated with a single property type.

Moreover, the company’s assets are located in high-barrier-to-entry markets, mainly in Southern California, Northern California, Oregon, Washington and Hawaii. The solid demographics-high population density and household income in its operating markets offer scope for decent growth. However, strong competition and interest rate hike remain concerns for the company.

Currently, American Assets Trust has a Zacks Rank #3 (Hold). Shares of American Assets Trust have outperformed the Zacks categorized REIT and Equity Trust – Retail industry in the past one year. Shares of the company gained 5.0%, while the industry incurred a loss of 10.4%.

Stocks to Consider

Better-ranked stocks in the REIT space include CoreSite Realty Corporation COR, Piedmont Office Realty Trust, Inc. PDM and Urban Edge Properties UE. All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CoreSite Realty currently has a long-term growth rate of 19.1%.

Piedmont Office Realty’s estimates for 2017 moved north by nearly 0.6% to $1.73, over the past 60 days.

The Zacks Consensus Estimate for Urban Edge Properties’ funds from operations (FFO) per share for 2017 of $1.37 reflects 7.9% year-over-year growth.

Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

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American Assets Trust, Inc. (AAT): Free Stock Analysis Report
Urban Edge Properties (UE): Free Stock Analysis Report
CoreSite Realty Corporation (COR): Free Stock Analysis Report
Piedmont Office Realty Trust, Inc. (PDM): Free Stock Analysis Report
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