Shares Of Realty Income Drop More Than 5 Percent

NEW YORK (AP) — Comments by a high-profile hedge fund manager pushed down shares of real estate investment trust Realty Income Corp. in early trading Wednesday, Janney research analysts said.

Analysts Andrew DiZio and Daniel P. Donlan didn't name the New York-based hedge fund manager who said Realty Income would be a good prospect for short selling because possible bankruptcies may cause large-scale vacancy and could reduce cash flow. They were not immediately available to comment on who the hedge fund manager is or where the attribution appeared.

Realty Income's underwriting style, which looks at tenant credit at the store level, might be ideal for a potential bankruptcy situation, the analysts said, maintaining a "Neutral" rating on the stock. In the event of a Chapter 11 bankruptcy filing, a tenant will likely close stores that aren't profitable and the real estate investment trust would purchase only those units that have positive cash flow, they said.

DiZio and Donlan maintained a $26.50 fair value estimate and said they would wait to see where shares settled before considering any ratings adjustment.

Shares of Realty Income slid $1.25, or 5.1 percent, to $23.46 in late afternoon trading Wednesday. The stock has traded between $14.25 and $28.23 over the past year.