Goldman Sachs (NYSE:GS) has taken the red pen to the UK property sector with downgrades for industrial warehouse group Segro and West End-focused Great Portland Estates (LSE:GPOR) (GPE).
For GPE, Goldman does not like the outlook for offices in Central London, with its rating now a sell, from hold.
Debt maturities plus a spike in new office developments will hit rental values, with slow deal activity putting pressure on yields.
British Land is also rated a sell for higher costs of capital in a rising yield environment.
Segro, meanwhile is facing a softer outlook for leasing demand due to weak manufacturing, which might hinder any further outperformance from here. Neutral from buy is now the rating.