Land Securities tops FTSE 100 on UBS upgrade

7th Jul 2015 13:10

Land Securities rose to the top of the FTSE 100 after UBS upgraded the stock to 'buy' from 'neutral' and raised the price target to 1,425p from 1,300p.Analysts at the bank noted how the stock has been trading very tightly around net asset value for the past few years, but in recent months has de-rated and currently stands at a 7% discount to spot NAV and 14% discount to UBS' March 2016 forecast of 1,426p."Investors may be concerned by rising bond yields and that we may be reaching the peak in the cycle, but we think this is misplaced. We view the discount as an opportunity, noting 13% return on equity for the coming year," said the Swiss bank.UBS pointed out that rents are rising, particularly in London offices. It said London office rents may be breaking out of their long-term ranges. "They are down as much as 57% on inflation adjusted terms since the 1980s, indicating further room to grow."Still, UBS said it continues to prefer British Land, which it rates at 'buy', for its higher leverage and more development optionality, including the 7m square foot Canada Water scheme.At 14:30, Land Securities shares were up 3.1% at 1,268p, while British Land was up 1.9% at 814.50p.