Liberum downgrades British Land to 'hold'

24th Nov 2014 09:56

Lower UK bond, or Gilt, yields have prompted broker Liberum to lift its net asset value (NAV) forecasts for UK property groups British Land and Land Securities."In our view, the UK real estate cycle sits in something of a sweet-spot, where yields appear unlikely to rise in the near future and rental growth remains measured without risking overheating," said analysts Michael Burt and Jon Stewart.However, with the stocks already up 20% over 2014 so far, the analysts reckon that these NAV upgrades are already in the price.They said that stock valuations now sit close to NAV, while returns look to peak in 2015.Liberum has downgraded its rating for British Land from 'buy' to 'hold' and has left Land Securities at 'hold'.It expects greater NAV growth at Land Securities over the next three years helped by the repositioning of its shopping-centre portfolio, while British Lands' NAV growth will be limited by its exposure to foodstores, where like-for-like sales continue to fall."To be a 'buyer' requires yields to stay lower for longer, and/or a cut to our return requirements. This feels at odds with a maturing property cycle and we would wait for a better entry point."British Land was trading more or less flat on Monday, while Land Securities rose 0.5%.