MS weighs in on how to play Europe's property sector

CTP NV

25/03/2025 11:35

** Morgan Stanley weighs in on how public market investors can play European property sector, which it says is not an "obvious" one for rotating to from the U.S. to Europe or doesn't screen well on current equity market themes

** The sector it the most under-owned in Europe with an undemanding valuation, it says, adding that private investors started with M&A approaches

** MS says it largely keeps its view on the sector as "attractive" and sees upside potential to most of the stocks, especially UK REITs and logistics

** The broker says UK REITs like British Land BLND.L, Derwent DLN.L and GPE GPEG.L can play offence and logistics like CTP CTPNV.AS or Segro SGRO.L will outperform

** "Lower bond yields from growth concerns could see the sector perform well in absolute terms but we could see outperformance from German residential," it adds

** Its top pick is British Land and it raises Spain's Colonial COL.MC to "overweight" from "equal-weight" as it sees relative resilience in asset values, an improved balance sheet and solid EPS growth ahead

** It also ups UK-based REIT Shaftesbury Capital SHCS.L to "overweight" from "equal-weight" saying it had the best rental growth in the sector, despite the weak macro backdrop

** It downgrades, though, LEG Immobilien LEGn.DE to "underweight" from "equal-weight" and UK-based REITs Hammerson HMSO.L and Land Securities LAND.L to "equal-weight" from "overweight"

 (Reporting by Tiago Brandao)

 ((Tiago.Brandao@thomsonreuters.com;))