Barclays prefers UK in European residential market, double-downgrades Kojamo

Wallenstam AB

21/06/2023 09:44

** Barclays forecasts falling property valuations across its
coverage of European residential real estate, shifting its
relative preference to the British market
    ** "Residential is the lowest-yielding asset class in Europe
... and the sudden increase in base rates has made earnings more
vulnerable given rental restrictions sometimes apply," says the
brokerage
    ** It says residential landlords in continental Europe and
Nordics operate with relatively higher leverage than UK peers
    ** The brokerage expects base rates to rise until the end of
2023, which it says could imply two additional periods of
valuation declines
    ** It expects portfolio valuations to fall by 15%
peak-to-trough on average, though Nordic landlords Kojamo
 KOJAMO.HE  and Wallenstam  WALLb.ST  could see declines of
about 20%
    ** Barclays upgrades Grainger  GRI.L  to "overweight" from
"equal weight" on its exposure to the UK private rented sector,
saying the company is in a position to deliver "material" EPS
growth
    ** It double-downgrades Kojamo to "underweight" from
"overweight" saying the Finnish company's yield is "too tight"
for the level of risk
    ** It stays "underweight" on Ireland's IRES  IRES.I  and
Sweden's Wallenstam
    ** The note does not include German real estate
    ** Shares in Kojamo are down 3.4% at 0830 GMT

 (Reporting by Greta Rosen Fondahn)
 ((Greta.RosenFondahn@thomsonreuters.com))