Forecasting a 25% downgrade in the value of assets owned by the retail property sector, Liberum downgraded its rating on Land Securities Group PLC (LON:LAND) and cut share price targets for two of its peers.
Last week, FTSE 100-listed LandSec posted a £123mln annual loss before tax as the value of its assets fell 4.1% in aggregate over the year.
Retail asset value declines are being undermined across the sector by the many shopping chains calling in administrators or organising company voluntary arrangements where shops are shut and rents are cut.
“However, we believe the industry has yet to fully price the rising bargaining power of stronger surviving retailers,” Liberum said, noting high street giant Next’s analysis that its rents could need to fall by over 50% in coming years if sales continue to slip.
For the retail real estate investment trusts, the broker said this has prompted further NAV reductions across, calculating the three largest listed owners of UK retail property would like to sell around £3bn of assets in order to reduce exposures.
“Unfortunately there are few buyers at current valuations,” the analysts lamented.