Broker snap: Deutsche sees considerable rise in British Land

4th Jul 2011 16:49

Analysts at Deutsche Bank this morning issued a research note in which they recommend buying shares of property group British Land given that they expect the company, "to benefit from a continuation in the current cyclical upswing in UK commercial property values," which will see its share price appreciate considerably. In particular, the bank explains that, "we anticipate its central London office exposure (32%) to benefit from a particularly sharp upswing in this market, as rising demand meets shrinking supply." As well, these analysts defend the track record of the company´s management in timing the property cycle. Some investors are apparently criticizing the fact that they sold 50% stakes in Meadowhall, Sheffield and Broadgate, EC2 at around the bottom of the property market in 2009. Of possible interest, Deutsche Bank states that given the extremely tight investment market for high quality properties to persist for some time, we think that a promising route to growth for many property companies is to acquire portfolios of problem property loans from banks, possibly part-financed by equity issues. Furthermore, they add, recent discussions with the group´s CEO and CIO suggest that this option has, "at least moved on to the group´s agenda." Also, in these analysts opinion the company´s exposure to the central London office market is similar to that of Land Securities. Another factor in the company´s favour is that it has a much higher exposure to out-of-town retail, which they believe has better growth prospects than most other retail formats. Lastly, Deutsche Bank has announced that it is trimming its 2012 NAV projection by -2% due to a technical error that it highlighted on the past 20th of May. For the same reason the price target on the company´s shares has been lowered to 820p, from 840p previously. AB