Citing Brixmor Property Group's excellent retail sales and leasing performance, BMO Capital Markets upgraded Brixmor Property (BRX, Financials), on Friday. From "Market Perform," the retail center real estate investment trust, or REIT, now rates "Outperform." Rising from $30, its new price target of $33 shows a predicted 11% upside from the current stock price of $29.59.

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A BMO analyst, Juan Sanabria attributed the improvement to a number of positive occurrences for Brixmor, including improvements in the company's portfolio over prior years, competitive rent pricing, and attractive redevelopment prospects. Sanabria said that the competitive stance of the REIT is defined in part by Brixmor's "attractive, low basis rents" and accretive acquisition opportunities. He also noted as factors bolstering Brixmor's strong financial record and highly recognized management.

The company is also benefiting from an anticipated $507 million worth of continuous renovations; they are expected to boost net asset value, occupancy rates, and future growth capacity. Sanabria noted that the pipeline will also provide opportunities for more leasing activity, hence increasing BMO's faith in Brixmor's ability for profit growth.

Relative growth potential appears enticing compared to competitors given Brixmor's high leverage at 5.7 times net debt to EBITDA and tenant credit conditions suggesting stability. Leading net effective rent spreads and appropriate capital expenditures supporting future development help Brixmor's funds from operations multiple to have increased but remain appealing relative to other retail REITs.

Supported by its robust leasing momentum and accretive renovation strategy, BMO expects Brixmor to continue showing substantial growth against its competitors. The company's ability to keep solid leverage and record net effective rent helps to paint a picture of future profits development that is really robust.

Brixmor reported record occupancy levels in its third-quarter 2024 results: total leased occupancy at 95.6%; anchor leased occupancy at 97.7%; small store leased occupancy at 91.1%. Comprising 1.1 million square feet of new and renewal leases under development, the company achieved rent spreads on comparable space of 21.8%, including 0.6 million square feet of new leases with rent spreads of 31.8%.