Hammerson PLC (LSE:HMSO) has been granted an upgrade as Great Portland Estates (LSE:GPOR) was bumped down by Stifel analysts in a real estate rating reshuffle.
Stifel dubbed Hammerson’s decision to sell its stake in luxury shopping centre operator Value Retail as “transformative” in a sector note on Wednesday, with the £600 million proceeds set to help slash debt.
“The interest saving from [this] will offset the loss of income from the low-yielding Value Retail investments,” Stifel said, while also boosting the scope for further acquisitions.
Hammerson was upgraded to a “buy” rating as a result, with Stifel also pointing toward the return of rental growth in the retail property market.
Great Portland faced being re-rated from a “buy” to a “hold” in the same note, which Stifel said reflected wider market sentiment.
“The problem is that the equity market has demonstrated it is not willing to consider office specialists as investment opportunities,” analysts said.
“Unless and until yields start falling, the equity market will continue to refuse to reward the company's efforts.”
This comes after Great Portland raised £350 million in June, which Stifel said it was “right” to do in terms of providing investment capacity.
“Great Portland’s business model could well be vindicated in the medium to long term,” the bank added, however “for now the equity market is not willing to invest”.
“Prospective net tangible asset growth rates are too low to stimulate an upward share re-rating.”