UBS | This report is a compilation of individual stock previews ahead of the reporting season. As ever in the real estate sector, don’t expect too many surprises.
Upbeat tone in the UK
We expect a solid results season for the UK. We believe that outlook statements will remain upbeat on rental growth prospects. We see Derwent’s guidance on rental value growth as a key indicato r for London offices (25 th February).
Continental Europe: more differentiated outlooks
Overall, we expect a solid set of results for Continental companies, with the exception of Icade, which is likely to do some kitchen sinking at year -end in our view. The lack of indexation in France next year as well as the slowdown in uplifts fr om refinancing will mean that management will have to work harder to sustain cash-flow growth in 2016e. We see risks to Unibail-R’s guidance on the back of increased office disposals. We will also look for signs to confirm our sentiment that the Paris office market has turned the corner.
German residential: strong asset value growth expected
Deutsche Wohnen preannounced its results last week, highlighting very strong growth in net asset values over H2 15 (c+15%). We expect significant growth for peers LEG Immobilien (+10%) and Vonovia (+8%) as valuers seek to close the gap between market and book values in German residential.
How to play it
With all UK stocks under our coverage currently trading at a discount to NAV (especially the majors), it could take very little positive news to pique investors’ interest. Newsflow on disposals could also be a positive catalyst for Icade, Klépierre and Gecina (all Outperform).
