Berenberg has downgraded its rating for Workspace PLC (LON:WKP) and initiated on three more property stocks in a note launching coverage of the London-listed office market.
The German bank has cut its stance for FTSE 250-listed Workspace to ‘hold’ from ‘buy’ with a reduced target price of 900p, down from 1,200p, with the shares currently trading at 951.50p each, off 1.2% today.
READ: Workspace shares gain as it reports strong demand and invests in office space
It also initiated coverage on Derwent London PLC (LON:DLN) with a ‘sell’ rating and 2,650p price target; on Great Portland Estates PLC (LON:GPOR) with ‘sell’ and a 600p price target; and Helical PLC (LON:HCL) with ‘hold’ and a 320p price target.
Berenberg also reiterated its ‘sell’ stance on IWG PLC (LON:IWG) and 200p target price.
In the note, Berenberg’s analysts said: “The listed London office market many attractions for both the UK and international investors, including providing exposure to a real estate market in one of the world’s leading cities that has a history of impressive asset development and healthy NAV growth, backed by strong management teams.”
“However,”, they added, “the sector is walking a tightrope. Although we acknowledge an improvement in portfolio quality and applaud the deleveraging activity undertaken to date, we still expect a cyclical market correction to impact the listed sector meaningfully.”
The analysts concluded: “Capital values and rents are at all-time highs and have begun to turn while increasing tenant expectations are putting pressure on operating margins and increasing building obsolescence.”