DEA @ STRH - Quick Thoughts: Modest core FFO Beat, Guidance Maintained

FULL REPORT

Modest core FFO Beat, Guidance Maintained

Rating: Buy

Market Cap (M): $826; Price: $18.60 as of 11/07/2016

Price Target: $21.00
Sector: Office REITs

Net-net: We think the stock could modestly outperform this morning, as core FFO results were a penny ahead of the consensus and our estimate. In addition, DEA reiterated its 2016 guidance (at the $1.21 midpoint), which remained slightly higher the street and our estimate. In short, DEA delivered what we had expected and we will look for additional details on the conference call at 10am (1-877-705-6003).

Core FFO Beats Consensus: Third-quarter FFO was $0.30 per share versus our estimate of $0.29ps and the consensus of $0.30. Excluding acquisition costs, normalized FFO of $0.32ps was $0.01 ahead of our estimate and the consensus (each $0.31ps). The $0.01 per share normalized FFO beat versus our estimate was driven by higher NOI and lower interest expense. Normalized FFO of $0.32ps was up 20.5% year-over year, driven by higher NOI and was partially offset by higher interest expense.