UPDATE: MLV & Co. Upgrades American Assets Trust

MLV & Co. upgraded American Assets Trust, Inc. (NYSE: AAT) from Hold to Buy and raised its price target from $38 to $41 in a report issued Wednesday.

Analysts Paul Morgan and Joe Ng suggested "catalysts over the next few quarters for AAT include: 1) pricing data points support a higher NAV and PT; 2) core metrics are set to ramp based on recent leasing; and 3) progress at developments in San Diego and Portland should prove out value-creation capabilities."

Morgan noted that the price target is "roughly 5 percent below our 3Q15 NAV per share estimate, in-line with AAT’s average discount to consensus NAV over the past three years, and our NAV estimate applies a blended 5.30 percent cap rate to forward NOI. Including the stock’s 2.5 percent dividend yield, our price target implies a 12-month total return potential of 17 percent."

The report conclucded that "patient investors could be in a position to be rewarded, with ss-NOI growth set to reaccelerate in late 2014 and development cash flows mounting in 2015. As such, we see the potential given AAT’s strong management and asset quality for the emergence of a sustainable P/NAV premium, though short-term asset noise may pose a near-term obstacle."

American Assets Trust, Inc. closed at $35.95 on Tuesday.