Morgan Stanley bearish on office REITs, downgrades Paramount Group

Office Properties Income Trust

23/11/2022 13:28

** Morgan Stanley bearish on office real estate investment
trusts (REITs) due to higher interest expenses and tenant
moveouts 
    ** Brokerage estimates office REITs will not have positive
growth in funds from operations (FFO) in FY23 due to lower
occupancy levels and higher interest rates
    ** Downgrades Paramount Group Inc  PGRE.N  to "equal weight"
and cuts PT to $6.5 from $8; brokerage expects more growth
headwinds for co due to three lease expirations in the next two
years
    ** Also cuts PT for Vornado Realty Trust  VNO.N  to $19, SL
Green Realty Corporation  SLG.N , Office Properties Income Trust
 OPI.O  to $11, Boston Properties Inc  BXP.N  to $65, Hudson
Pacific Properties  HPP.N  to $10, and Highwoods Properties
 HIW.N  to $30
    ** Morgan Stanley sees slowdown in development for REITs,
led by for BXP, VNO and SLG, due to slower disposition (selling
of an asset) pace, higher financing costs and slowdown in
leasing activity 
    ** Shares were down for PGRE and HPP by 1.8% and ~4%
premarket respectively, while SLG and OPI were up 0.7% and 1.4%
premarket respectively, in light trading
 (Reporting by Shristi  Achar A in Bengaluru)
 ((Shristi.AcharA@thomsonreuters.com;))