NexPoint Residential Trust Inc. (NXRT)

[Enterprising Investor]

NexPoint leads apartment names after positive coverage (6/28/16)

By Stephen Alpher, SA News Editor

NexPoint Residential Trust has the "right strategy in the right markets," says Canaccord's Ryan Meliker, initiating coverage with a Buy and $20 price target (vs. current $18.27).

The company's M is to buy B-quality multifamily properties in the Southeast and Southwest and then boost rents/lower cap rates with renovation. Meliker sees 2016 same-store NOI of 15.4% vs. sector peers at 6.3%, with similar outperformance through 2018.

Remaining renovations to be completed should boost NAV by $7.37 per share, possibly driving 40% upside in the stock.

He also starts coverage on Monogram Residential, but it just rates a Hold. While the stock trades at a 12% discount to NAV, headwinds should persist until H2 2017. Among those is a retail shareholder base in the money at about $10 per share (current is $9.97), a preferred equity hurdle that caps the stock at about $11.50 in the near-term, and a development pipeline only expected to stabilize in H2 2017.

http://seekingalpha.com/news/3190840-nexpoint-leads-apartment-names-positive-coverage