Newspaper article The Evening Standard (London, England)

Broker's Rethink Has the Reits on the Slide

Newspaper article The Evening Standard (London, England)

Broker's Rethink Has the Reits on the Slide

Article excerpt

Byline: MICKEY CLARK

SHARES of the big property companies took a hit today after one brokerwarned the sector may be on the slide as net asset values fall next year.

Morgan Stanley has downgraded the real estate investment trusts (Reits) withthe exceptions of Liberty International, down 20p at 1083p, and Hammerson, 30poff at 1024p, where it retains an overweight stance.

Brixton, 712p cheaper at 338p, has been cut from overweight to underweight withits target slashed from 550p to 300p while Land Securities, 10p easier at1552p, and Segro, 412p off at 463p, have been cut from overweight toequalweight. Land Securities' target drops from 2110p to 1420p and Segro's from680p to 420p.

The broker says that given the cyclical nature of the property sector, it isimportant to focus heavily on the risks for further falls in share prices whenthe cycle has started to turn down. It says that while its "base case" onlyenvisages a relatively modest 9% further downside to the end of 2008, it isexpecting a further 10% fall in net asset values in 2009.

It has raised Liberty International's price target from 930p to 1030p andupgraded Hammerson from equalweight to overweight, but lowered its sights onthe price from 1510p to 980p.

Morgan Stanley said this partly reflects its expectation that values of bigregional shopping centres will hold up better than those of central Londonoffices.

Shares generally also came off the boil despite a late rally on Wall Streetovernight. Lack of demand left prices a touch lower, with the

FTSE 100 index dipping 3.8 points to 6510.2.

Mining shares were weaker, with Kazakhmys down 33p at 1452p, Lonmin 70p at3339p, and Vedanta Resources 29p at 2121p.

Goldman Sachs has cut BHP Billiton, down 17p at 1788p, from buy to neutral andits target from 1770p to 1750p as it reckons the shares look fully valued. Thebroker has also removed BHP from its buy list after reaching its price target.

Volume growth from the larger oil, iron ore and copper projects are alreadypriced in compared with its bigger mining peers and Goldman sees littlerelative scope for improvement. …

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