While acknowledging it is “impossible to be accurate” on the financial impacts of the Covid-19 pandemic, the bank’s analysts said they ultimately “believe it will accelerate and exacerbate existing underlying structural trends but don’t, at this stage, see it resulting in material changes to other sub-sectors”.
For retail landlords, particularly in continental Europe, the analysts think the pandemic is likely to accelerate the shift to online channels, meaning for logistics owners there should be a short-term effect and a longer-term benefit from the accelerated structural trend of online sales.
Landlords exposed to residential and UK healthcare are “most immune”, while the effect on office landlords is “difficult to ascertain” but most risks is seen for low-yielding office exposure that requires capital growth and/or developments to generate high future returns.
Based on share prices that have “materially underperformed”, upgrades to ‘overweight’ were dished out to retail-exposed Hammerson and LandSec, with price targets of 115p and 745p respectively.
Ratings for other London-listed names were not changed though price targets were cut for some, including British Land (LON:BLND) was kept at ‘underweight’ with a target cut to 385p from 460p, NewRiver REIT (LON:NRR) slashed to 90p from 200p but kept at ‘equal weight’, Shaftesbury (LON:SHB) cut to 525p from 700p but and still ‘underweight’, Unite’s (LON:UTG) target cut to 1,065p from 1,320p, and Workspace (LON:WKP) cut to 935p from 1,150p.