On Friday, BMO (TSX:BMO) Capital Markets updated its outlook on Flagship Communities REIT (MHC-U:CN) (OTC: FLGMF), raising the price target to $20.00 from the previous $19.00, while retaining an Outperform rating on the stock. The adjustment follows the real estate investment trust's third-quarter results, which surpassed the analyst's expectations.
The improved financial performance is partly attributed to the successful integration of a $90 million portfolio acquired in the second quarter of 2024. This acquisition is reportedly performing better than initially projected. Additionally, Flagship Communities REIT is planning to implement a 6% average lot rent increase across its entire business at the start of 2025.
The analyst's optimism is also based on revised projections for the company's net asset value (NAV) and funds from operations (FFO). The forecast for 2025 has been increased by 11% compared to the previous estimate. This has prompted the increase in the price target to $20.00.
Flagship Communities REIT is currently trading at an attractive implied capitalization rate of 7.9% relative to the firm's forward twelve months (FTM) net operating income (NOI), and at approximately 11 times the firm's projected 2025 FFO. The analyst has reiterated the Outperform rating, signaling confidence in the REIT's ongoing performance and future prospects.
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