BofA sees 'rates shock, reflation trade' for Europe's real estate, property in 2022

Eurocommercial Properties NV

19/01/2022 18:13

** "This year is time to turn more cautious" on European real estate & property, BofA Global
Research says, as the end of a 10-year performance boosted by "easy" monetary policy draws near
    ** Citing higher rates and widening credit spreads, BofA says it positions for a reflation
trade and sees market swings as an opportunity to build exposure to structural winners
    ** It recommends "companies with inflation-indexed yields at reasonable prices" and prefers
high-quality management teams and good capital allocators in healthcare, residential and office
    ** "In a rising real rates environment, current mid-cycle valuation doesn't leave room for
being long winning sectors and low-yielding stocks," BofA flags as it downgrades six stocks
    ** It downgrades Shurgard  SHUR.BR  to "underperform" from "neutral" on higher UK taxes and a
dividend freeze as well as Segro  SGRO.L  and Safestore  SAFE.L  to "neutral" from "buy"
    ** BofA cuts "value trap" Hammerson  HMSO.L  and Capital & Counties  CAPCC.L  to "underperform"
from "neutral" and PSP Swiss Property  PSPN.S  to "neutral" from "buy" on low yields
    ** It however ups Covivio  CVO.PA  to "neutral" from "underperform", driven by higher rental
and capital value growth
    
                          BofA's Real Estate & Property Coverage Overview
    RATING                  "buy"                     "neutral"               "underperform"
 COMPANY NAMES   Merlin Properties  MRL.MC ,      Covivio  CVO.PA ,     Carmila  CARM.PA , Capital
                  Big Yellow Group  BYG.L ,     Inmobiliaria Colonial      & Counties  CAPCC.L ,
                 Aedifica  AOO.BR , Cofinimmo     COL.MC , Safestore     Unibail-Rodamco-Westfield
                   COFB.BR , Great Portland         SAFE.L , Segro           URW.AS , Hammerson
                   GPOR.L , Land Securities      SGRO.L , Swiss Prime        HMSO.L , Klepierre
                Group  LAND.L , Warehouses De   Site  SPSN.S , British    LOIM.PA , Eurocommercial
                  Pauw  WDPP.BR , Workspace     Land Company  BLND.L ,     Properties  ECMP.AS ,
                    WKP.L , Derwent London        PSP Swiss Property        Shurgard  SHUR.BR  
                   DLN.L , Deutsche Euroshop            PSPN.S          
                  DEQGn.DE , Icade  ICAD.PA ,                           
                    Gecina  GFCP.PA , LEG                               
                 Immobilien  LEGn.DE , Grand                            
                  City Properties  GYC.DE ,                             
                     Vonovia  VNAn.DE                                   
 
 (Reporting by Juliette Portala)
 ((juliette.portala@tr.com))