Deutsche Bank has turned positive on British Land PLC (LON:BLND), upgrading its rating to ‘buy; from ‘hold’ in a big review of the property sector, pointing out that the firm is “a bellwether of the UK Real Estate office and retail market.”
The German bank also raised its target price for the FTSE 100-listed firm to 660p from 590p, with the stock trading at 609.5p, up 1.8% or 10.5p on Friday’s closing price.
READ: ‘Declining’ UK economy to hit British Land’s performance, says HSBC
In a note to clients, Deutsche Bank’s analysts said; “Given the extent of our forecast declines in BL's NAV over the next 2-3 years, we feel the current discount to last reported NAV of 34% is overdone.”
They added: “The portfolio is now weighted towards the less volatile West End and the near-term development pipe adds meaningful portfolio income.
“Recent disposals above book value and subsequent buybacks highlight good capital management and we increase our forecasts to reflect our positive outlook”.
Derwent London also upgraded
Elsewhere in the real estate sector, Deutsche Bank also upgraded its rating for mid cap peer Derwent London PLC (LON:DLN), raising its stance to ‘hold’ from ‘sell’ and increasing its target price to 2,750p from 2.000p.
The bank’s analysts said: “Derwent has a strong track record of delivering through-the-cycle returns above its cost of capital. It has high portfolio reversion to continue to drive earnings growth.”
Derwent London shares on the FTSE 250 index were up 2.6%, or 73p to 2,843p.
Deutsche Bank also raised its target price for blue chip Land Securities PLC (LON:LAND) to 1,050p from 1,000p, while retaining a ‘hold’ rating on the stock, which gained 1.6%, or 16p at 1,014p.
But the bank downgraded its rating for FTSE 250-listed Great Portland Estates PLC (LON:GPOR) and cut their target price to 620p from 710p, although that new level was still below the 619p the shares were trading at late morning, which was a 0.9%, or 5.5p advance on Friday’s close.