Broker snap: Morgan Stanley upgrades Land Securities and British Land

5th Jan 2012 17:30

In a research note on publicly traded European real estate companies dated January 4th analysts at Morgan Stanley wrote that they expect the net asset values of UK real estate investment trusts to decline 5% this year and by another 6% in 2013. Furthermore, the bank believes that UK commercial real estate values may fall 8% in 2012 while the number of properties considered to be "prime" will fall as bank financing dries up. Simply put, and in Morgan Stanley´s own words, "it is highly likely that property as an asset class will experience some degree of re-pricing."Despite that its analysts upgraded shares of Land Securities, the UK´s largest real estate investment trust, and British Land to "neutral" due to what they consider to be their realistic pricing of assets. Great Portland Estates, for its part, was raised to "overweight" because of its favorable debt-to-equity ratio and its potential to deliver better returns from development.AB