Goldman Sachs upgrades British Land to 'buy'

(Sharecast News) - Goldman Sachs upgraded its stance on British Land on Tuesday to 'buy' from 'neutral', citing a stronger growth outlook, as it took a look at European real estate stocks. The bank said it expects a combination of improving rental growth prospects, acquisitions, and pipeline opportunities to drive higher earnings per share/net tangible assets growth.

"We now forecast 7% EPS/6% NTA five-year compound annual growth rate," it said.

"Our economists' forecasts for lower rates further support our British Land upgrade to buy with our new 500p PT (up 22%) implying 36% upside potential."

More broadly, Goldman said that as REIT asset values bottom out, balance sheets remain under control, and capital markets/financing are increasingly supportive, REITs have been recovering.

The bank said it is now seeing increasing investment/M&A activity in the market - from a low base- and expects more to come.

"At the same time, operations remained largely healthy at 3Q24, with improving rental prospects in London offices while logistics may see less rent tension from here," it said.

"We see NTA re-rating as a key catalyst for the space with GSe 6% ahead of Visible Alpha Consensus Data on 2025E NTA for our 'buy' names."

At 0930 GMT, British Land shares were up 1.1% at 370.40p.

Goldman said its four 'buy' rated names with the highest implied price target upside are Unibail, WDP, Vonovia and Merlin.