'The downward cycle is over' - Bernstein sees recovery in European real estate

Unibail-Rodamco-Westfield SE

12/09/2024 13:04

** European property sector bottomed out and is set to recover,
supported by lower rate environment, Bernstein says
    ** Positive rental growth in good quality assets is expected to support
an increase in valuations and core profit, benefiting shareholders returns,
the broker says, anticipating a double-digit total accounting return on
average for 2025/26 
    ** Bernstein names Merlin Properties  MRL.MC  as top pick, citing the
group's leading position in the expanding data centre sector, and upgrades
"undervalued" Icade  ICAD.PA  and URW  URW.PA 
    ** Bernstein says growth may emerge earlier in Britain than across
continental Europe; prefers redevelopers Great Portland Estates  GPEG.L 
and Derwent London  DLN.L  over Workspace  WKP.L 
    ** On the German residential market, the broker prefers TAG  TEGG.de ,
quoting superior earnings and dividend potential supported by expansion in
Poland
    ** Bernstein cuts Belgian WDP  WDPP.BR  on less growth potential, and
prefers VGP  VGP1.BR , which delivers on its development plan and prompts
lower leverage concerns
 COMPANY NAME                            NEW RATING       OLD RATING
 Merlin Properties  MRL.MC               outperform       market-perform
 Icade  ICAD.PA                          outperform       market-perform
 Great Portland Estates  GPEG.L          outperform       market-perform
 Derwent London  DLN.L                   outperform       market-perform
 Land Securities Group  LAND.L           outperform       market-perform
 TAG Immobilien  TEGG.DE                 outperform       market-perform
 Unibail-Rodamco-Westfield  URW.PA       outperform       suspended
 VGP  VGP1.BR                            market-perform   market-perform
 Eurocommercial Properties  ECMPA.AS     market-perform   outperform
 LE Immobilien  LEGn.DE                  market-perform   outperform
 Workspace Group  WKP.L                  market-perform   outperform
 Warehouses de Pauw  WDPP.BR             underperform     market-perform
 
 (Reporting by Alban Kacher)
 ((alban.kacher@thomsonreuters.com))