15 Most Favored REITs According to Hedge Funds

3. Crown Castle Inc. (NYSE:CCI)

Sector/Industry: Real Estate Investment Trust (Specialty)

Share Price: $90.87

Potential Upside: 16.9%

Number of Hedge Fund Holders: 56

Crown Castle Inc. (NYSE:CCI) is one of the most favored real estate investment trusts according to Hedge Funds.

On January 5, KeyBanc assigned an Overweight rating to Crown Castle Inc. (NYSE:CCI) with a price target of $120. The firm’s estimates yield more than 32% upside from the current level.

KeyBanc attributed its rating to the company becoming a pure-play tower business following the sale of its fiber/small cell segment. The firm also noted 3%-4% contribution to adjusted funds from operations (AFFO), on a per share basis, from the successful execution of the company’s share buyback program. On the financial side, a large chunk of the company’s Sprint chunk, resulting from the merger of Sprint and T-Mobile, has come to an end.

Back on December 16, Eric Luebchow from Wells Fargo also maintained his Overweight rating for Crown Castle Inc. (NYSE:CCI). Despite a downward revision to his price target from $115 to $105, he sees an upside potential of 15.5% at the prevailing level.

Luebchow’s revision to the price target is based on a worst-case scenario, in relation to the ongoing lawsuit against DISH Wireless for their payment defaults. He believes that Crown Castle Inc. (NYSE:CCI) would be placed in a good position to meet consensus targets if it can squeeze around $1 billion in proceeds from the lawsuit.

Crown Castle Inc. (NYSE:CCI) manages essential wireless communication infrastructure assets such as towers, fibers, and small cells across the United States. It generates site rental income by leasing out its towers and fiber network to carriers, which ensures efficient connectivity. The business model revolves around such long-term lease agreements with major carriers and optimal capital allocation towards new assets.