Go sober for October is an annual Macmillan Cancer Support awareness and fundraising campaign. But let’s go further and try and stay sober – in terms of clear-headed language at least – for the rest of the year.
Some equity analysts casting a scrutinous eye over real estate are managing to do so. Never a group universally predisposed to positivity, many see some grounds for optimism.
Following its IPO, analysts began covering Cushman & Wakefield this week. At least six rated the stock as a “buy”.
Cushman’s size and global scale equip it to compete against its peers, says Morgan Stanley. Key hires, cross-selling and further M&A will drive growth, says the bank.
JMP Securities agrees, adding that tech will be a driver of growth too.
Meanwhile on this side of the Atlantic, analysts at Berenberg have given shopping centre REITs intu and Capital & Regional “buy” ratings. In doing so the German bank outlines three reasons it sees value in the UK shopping centre market.
Arguing that e-commerce isn’t everything, the analysts say not every retail offer can be digitised – at least not economically. As a result, physical stores with the “right product mix in the right locations are likely to remain the primary point of sale”.
The bank also notes the disconnect between the REITs’ current share prices and asset fundamentals. They also see a material shopping centre valuation correction as “unlikely for all but the most underinvested, poorly located or non-dominant assets”.
“Market fundamentals are attractive; yield spreads remain elevated, new supply remains constrained, systematic debt has fallen, REIT leverage remains comfortable and some lead indicators are showing green shoots,” says Berenberg.
I’m not sure I agree with all of that but clearly every market has a floor. It’s a question of whether we are there yet. And yes, not every aspect of retail works online, though the speed of platform change means more, not less, will do so in time.
In a week in which Mike Ashley has dismissed landlords who don’t agree to his revised House of Fraser lease terms as greedy, it’s important to avoid hyperbole in discussing the future of retail (as British Property Federation chief executive Melanie Leech said sensibly on the Today programme).
Indeed, in a market so driven by sentiment, and an environment so bedevilled by uncertainty, hyperbole is best avoided wherever possible.
Cushman’s analysts may be positive too, but they are suitably sober in their judgment. They acknowledge real estate is late cycle in the US but wise hires, complementary acquisitions and effectively deployed tech will still yield results – for Cushman and others too.
October is quite a month for charitable endeavours. It’s also Steptober – the first property industry-wide step challenge. All you need are three colleagues to join you and a smartphone. Even more exciting are the challenges you can lay down. Consider it an opportunity to get fit, raise money to fight youth homelessness and settle scores.
So lay down a step challenge to your suppliers. Test your peers. And prove once and for all that you have the edge over your rivals. Listen to a podcast on how to make the most of Steptober at www.egi.co.uk.
