UPDATE: Compass Point Initiates Coverage on Independence Realty Trust on Dividend Upside

In a report published Monday, Compass Point analyst Wilkes Graham initiated coverage on Independence Realty Trust (NYSE: IRT) with a Buy rating and $9.50 price target.

In the report, Compass Point noted, “We are initiating coverage on IRT with a Buy rating and $9.50 price target. The company IPO'd at $8.50/share on August 13, raising 4 million shares. The company currently owns 8 multifamily assets totaling 2,004 units and generating just over $10 million in NOI, and now has $27 million in net proceeds available to acquire $78 million in acquisitions later this year at a 7.0% cap rate and 65% LTV. These acquisitions should generate another $5 million - $6 million in NOI and, after expenses, should translate into AFFO of $0.80 in 2014 compared to the current dividend of $0.64. As such, we see upside in the dividend to $0.68/share next year in order to maintain management's desired distribution level of an 85% AFFO payout ratio. IRT should be able to leverage its external asset and property managers to source acquisitions and drive the dividend higher.”

Independence Realty Trust closed on Friday at $8.18.