Bad news already priced in for Euro real estate - Jefferies
08/11/2023 09:22
** Jefferies expects European real estate firms to face
headwinds from fears of a recession and high interest rates, but
says that "a lot of the bad news is already priced in"
** The sector looks even cheaper than in 2009, the broker
says, as share prices imply a 25% decline in asset portfolio
values vs a 20% drop in 2009
** "Over the past 20 years, the sector has always performed
well when the FED has stopped hiking rates," it says, adding
this tendency could be repeated when rates start to decline
** That said, Jefferies is not going "all-in", expecting a
drop in asset and appraisal values until the end of 2024 with
possible credit ratings cuts
** It warns of a particularly strong risk for Aroundtown
AT1.DE and Grand City Properties GYC.DE
** The broker is more positive on retail property names,
citing high dividend yield and less negative value adjustment
expected
** It stays neutral on logisitcs companies due to the
recession risk not being fully priced in, while it says the
valuation decline in offices is yet to happen
** Jefferies initiates nine real estate stocks with "buy"
ratings, nine with "hold" and six with "underperform"
(Reporting by Victor Goury-Laffont)
((Victor.goury-laffont@tr.com))