Broker snap: Jefferies cuts REIT targets across the board

6th Mar 2012 10:05

Jefferies said that the recent earnings season in the real estate investment trust (REIT) sector was 'reassuringly unexciting' and has reduced its net asset value (NAV) forecasts by 2% on average."We expected a 'Reassuringly Unexciting' earnings season and that is what we got. NAVs were closely in line with our forecasts, but in the mix there was a wider spread of asset performance than we had anticipated," the US broker said.REIT share prices are up an average of 9% in the year-to-date, with most of this growth coming in January. "Most of the performance we expected in 2012 came in the first two months and we see little to go for in the short-term."Jefferies says that the Bank of England's recent quantitative easing boost is good for long-term interest rates and supportive for property values. Furthermore, "the new National Loan Guarantee Scheme will underwrite up to £40bn of credit to small businesses which should get money circulating and begin to off-set weak growth."While price targets are slashed across the board, to reflect lower assumed NAVs, the broker says that its key recommendation changes are for Land Securities (upgraded from hold to buy) and British Land (downgraded from buy to hold).BC