DB sees limited downside to European real estate stocks in 2023
19/01/2023 09:51
** Deutsche Bank turns slightly more positive on European
real estate, but "bleak" 2023 sector outlook makes it stay
cautious on fundamentals
** "Depressed stock valuations should limit the downside,"
DB says
** It cites balance sheet quality and rental growth
prospects, key decisive factors to its recommendations, as
downside protection which can additionally provide attractive
investment opportunities
** DB's top picks are Gecina GFCP.PA , Klepierre LOIM.PA ,
and Instone INS2.DE , all upgraded to "buy" from "hold", and CA
Immobilien (CAI) CAIV.VI reiterated at "buy"
** The broker likes Gecina and CAI for their high quality
office product combined with solid balance sheet
** "For CAI we see rent reversion catch-up as an extra
driver, for Gecina it's high demand for rare, best-in-class
product", it says
** DB likes Klepierre for its high level of defensiveness
with regards to balance sheet and investments, and shielding
dividends
** The broker sees an upbeat outlook for Instone's
newly-built rents thanks to strong supply-demand, and a chance
for a recovery of demand from institutional investors for carbon
efficient product
** DB sticks to its neutral/slightly negative view on German
residential landlords, given their exposure to low cap rates,
high leverage and limited rental growth - favours LEG LEGn.DE
over Vonovia VNAn.DE and TAG TEGG.DE
(Reporting by Federica Mileo in Gdansk)
((Federica.mileo@thomsonreuters.com))