Jefferies sticks to its constructive view on the European real estate sector in 2024, though flags that the market might be too optimistic about the timing of the first interest rate cuts
"The real estate sector should benefit from first rate cuts as a whole; however, if the market is too optimistic with first cuts, the most leveraged companies should underperform the overall index," - the analysts write in a note
They list Argan , Aroundtown , Grand City Properties , LEG Immobilien , Colonial and Merlin Properties among highly indebted firms facing the risk of a credit rating downgrade, adding that Vonovia and URW are close to that as well
The relief from rate cuts could be short-lived, the brokerage says, as "most companies have not yet felt the impact of rising interests and the asset decline is most likely not over, especially given the lagging stance of European experts"
It expects asset valuation to fall by 7% on average in 2023, and by 3% in 2024
The office players will be in focus throughout the year, it says, as they are facing stronger headwinds than other sub-sectors due to the economic slowdown and the work-from-home trend continuation
On the other hand, it adds that the retail real estate units are well-positioned to benefit from sector re-rating as its main KPIs are back to the pre-COVID levels, and retail sales as well as vacancy rates have been broadly stable during a recessionary environment
Jefferies cuts both Merlin and LEG Immobilien from "buy" to "hold" citing lack of details on expansion financing for the former and high debt levels for the latter
It upgrades Mercialys to "buy" from "hold" seeing better prospects for the underlying operations for the group after the sale of Casino's French assets is completed
The brokerage is concerned about the German residential landlords' business model given such high leverage ratios despite one of the strongest supply and demand imbalances - "German residential players are not out the woods yet," it says
(DeGiro)
Je vraagt je dan af of dit soort waarschuwingsteksten van Jefferies ook op aandelen als Nvidia of Tesla worden geplakt met k/w verhoudingen van 100. Maar goed, als je achter de trend aanloopt, moet je dat ook maar blijven doen.