Peak Rates Can’t Come Soon Enough For Real Estate
By Michael Msika, Bloomberg Markets Live reporter and strategist
Investors are shunning the real estate sector again, as headwinds from high rates show no sign of abating.
Property stocks are back among the year’s worst performers. They have plunged 22% since early February, with the threat of recession returning to the top of worries for market participants already calculating the fallout for funding costs from Silicon Valley Bank’s collapse and preparing for rates to remain elevated for longer.
Valuations resemble those seen during past crises, like the pandemic or the post-2008 period, and Citigroup analysts led by Aaron Guy say the bad times look far from over.
“If we test historic trough valuation, real estate stocks face over 50% downside,” the Citi analysts say, citing the blow to earnings growth from hawkish central banks and a faltering economy. Further tightening in credit markets could contribute to a cut of as much as 40% in real estate values by 2024.
Commercial real estate stocks, in particular, aren’t priced for what lies ahead, according to the Citi analysts. They prefer peers with less onerous debt burdens and companies still able to increase rents. Their sell ratings include office specialists Gecina and Colonial and shopping center operator Klepierre. They have buys on residential-focused Vonovia, LEG and Grainger, self-storage provider Safestore and Aedifica in the health-care space.
Stocks in the sector have suffered a complete reversal of their strong bounce in January, when the idea that peak yields and a soft landing might be in sight took hold. As central banks stick to their rate-hiking campaigns and investors start to see the impact of these on the real economy, optimistic views on the sector have become increasingly rare.
According to the March Bank of America European fund manager survey, the proportion of investors reporting they are underweight real estate jumped to a net 45% from 20% in February, making it the region’s “most disliked sector.”
Investors are struggling to be bullish on real estate before they see a definite peak in bond yields. That could come this year, but it’s a difficult call to make with central banks still in hiking mode. In any case, property stocks failed to get a boost from the drop in yields in March as recession concerns took hold.
BofA strategists led by Sebastian Raedler have a contrarian view and are overweight real estate, given their opinion that lower bond yields are coming. This, along with forecasts of softer readings for economic expansion in Europe, support a prediction that the sector will outperform.
Even with all the gloom, analysts haven’t taken the red ink to their share price targets. Those have been stable this year, in contrast with the sharp drop in the stocks. The result is that real estate is the European sector with the greatest potential upside after banks, promising returns of 31% over the next 12 months.
“We remain underweight real estate although arguably positioning and valuations reflect a lot of pessimism already,” says Barclays strategist Emmanuel Cau. He expects high rates to pressure property prices and earnings as companies refinance debt. “As we get closer to peak rates, the risk-reward for rising-rate losers vs rising-rate winners may be more balanced going forward.”
Loading…
0 Comments
Latest Hacked Sites
- JD Group - 521,878 breached accounts June 5, 2023In May 2023, the South African retailer JD Group announced a data breach affecting a number of their online assets including Bradlows, Everyshop, HiFi Corp, Incredible (Connection), Rochester, Russells, and Sleepmasters. The breach exposed over 520k unique customer records including names, email and physical addresses, phone numbers and South African ID numbers.
- RaidForums - 478,604 breached accounts May 31, 2023In May 2023, 478k user records from the now defunct hacking forum known as "RaidForums" was posted to another hacking forum. The data dated back to September 2020 and included email addresses, usernames, dates of birth, IP addresses and passwords stored as Argon2 hashes. The data was provided to HIBP by a source who requested […]
- Polish Credentials - 1,204,870 breached accounts May 30, 2023In May 2023, a credential stuffing list of 6.3M Polish email address and password pairs appeared on a local forum. Likely obtained by malware running on victims' machines, each record included an email address and plain text password alongside the website the credentials were used on. The data included 1.2M unique email addresses.
- Luxottica - 77,093,812 breached accounts May 19, 2023In March 2021, the world's largest eyewear company Luxoticca suffered a data breach via one of their partners that exposed the personal information of more than 70M people. The data was subsequently sold via a popular hacking forum in late 2022 and included email and physical addresses, names, genders, dates of birth and phone numbers. […]
- RentoMojo - 2,185,697 breached accounts May 10, 2023In April 2023, the Indian rental service RentoMojo suffered a data breach. The breach exposed over 2M unique email addresses along with names, phone, passport and Aadhaar numbers, genders, dates of birth, purchases and bcrypt password hashes.
- MEO - 8,227 breached accounts April 24, 2023In early 2023, a corpus of data sourced from the New Zealand based face mask company MEO was discovered. Dating back to December 2020, the data contained over 8k customer records including names, addresses, phone numbers and passwords stored as MD5 Wordpress hashes. MEO did not respond to multiple attempts to report the breach.
- Terravision - 2,075,625 breached accounts April 23, 2023In February 2023, the European airport transfers service Terravision suffered a data breach. The breach exposed over 2M records of customer data including names, phone numbers, email addresses, salted password hashes and in some cases, date of birth and country of origin. Terravision did not respond to multiple attempts by individuals period over a period […]
- OGUsers (2022 breach) - 529,020 breached accounts April 14, 2023In July 2022, the account hijacking and SIM swapping forum OGusers suffered a data breach, the fifth since December 2018. The breach contained usernames, email and IP addresses and passwords stored as argon2 hashes. A total of 529k unique email addresses appeared in the breach.
- The Kodi Foundation - 400,635 breached accounts April 13, 2023In February 2023, The Kodi Foundation suffered a data breach that exposed more than 400k user records. Attributed to an account belonging to "a trusted but currently inactive member of the forum admin team", the breach involved the administrator account creating a database backup that was subsequently downloaded before being sold on a hacking forum. […]
- Sundry Files - 274,461 breached accounts March 31, 2023In January 2022, the now defunct file upload service Sundry Files suffered a data breach that exposed 274k unique email addresses. The data also included usernames, IP addresses and passwords stored as salted SHA-256 hashes.
NY Times
- Inside the Tent Camp Housing Thousands of Migrant Children – ‘No Place for a Child’
Migrant children and families are sleeping shoulder to shoulder on mats in a Texas border facility designed for 250 people that is now holding more than 4,100, according to some of the first photographs to emerge from the crowded camp that has become a focal point of the Biden administration’s struggles to absorb thousands of […]
- Atl Suspect’s Fixation on Sex Is Familiar Thorn for Evangelicals
“Sex addiction” is not an established psychiatric diagnosis, and there is a debate in the mental health community about how to define and treat compulsive sexual behavior. “There’s no evidence-based treatment for sex addiction,” said Joshua Grubbs, an assistant professor of psychology at Bowling Green State University and a clinical psychologist. Evangelical sex addiction treatment […]
- Tom Cotton Mocks Social Justice Warriors at New York Times in CPAC Speech
Sen. Tom Cotton (R-AR) on Friday mocked “social justice warriors” at the New York Times and their “meltdown” this summer over his op-ed in the paper calling for troops to restore order during the rioting at the time. Speaking on the first day of the Conservative Political Action Committee (CPAC) in Orlando, Florida, Cotton recalled how hundreds […]
- Congress Clears 2-Day Spending Extension to Finalize Stimulus Deal
Negotiators worked into Friday night to put the finishing touches on key details of the stimulus compromise, continuing negotiations on how long unemployment benefits should last, how to distribute federal relief for small businesses and the extension of a federal eviction moratorium. The plan was expected to revive the Paycheck Protection Program, a loan program […]
- SACRAMENTO Unemployment Scam Using Inmates Names Costing California Hundreds of Millions
SACRAMENTO — A rash of fraudulent pandemic unemployment claims filed under the names of jail and prison inmates, including more than 100 on death row, has bilked California out of hundreds of millions of dollars, a law enforcement task force said Tuesday. In a letter to Gov. Gavin Newsom, the task force, led by district […]
- Politics, Science and the Remarkable Race for a Corona Vaccine
WASHINGTON — The call was tense, the message discouraging. Moncef Slaoui, the head of the Trump administration’s effort to quickly produce a vaccine for the coronavirus, was on the phone at 6 p.m. on Aug. 25 to tell the upstart biotech firm Moderna that it had to slow the final stage of testing its vaccine […]
- Newsom Do as I Say, Not as I Dine Coronavirus Message
SAN FRANCISCO — It was an intimate meal in a wood-paneled, private dining room in one of California’s most exclusive restaurants. No one around the table wore masks, not the lobbyists, not even the governor. [Sign up for California Today, our daily newsletter from the Golden State.] Photos that surfaced this week of a dinner […]
Washington Post
- Nolte: Washington Post Won’t Return Fake Pulitzer, ‘Stands By’ Russia Reporting
Both the far-left New York Times and Washington Post refuse to return Pulitzers for spreading the lie former President Trump colluded with Russia to win the 2016 presidential election. Would Hitler return a fake Pulitzer? Now that the Monday release of the Durham Report has debunked every facet of the Russia Collusion allegation and proved […]
- Donald Trump Shreds ‘Fake News Media’ in Series of Videos: ‘Not Reporting with Credibility Has Its Consequences’
Former President Donald Trump shredded the New York Times, the Washington Post, CNN, and MSNBC as “fake news media” in a series of videos shared to his Truth Social account and his campaign’s war room Twitter account on Wednesday. “The fake news media like CNN, MSDNC – which is sometimes referred to as MSNBC –the […]
- Media Ignore Physical Attack on Republican Gen. Don Bolduc
The establishment media have ignored the physical attack against Republican New Hampshire candidate Gen. Don Bolduc. The three top establishment newspapers, the New York Times, Washington Post, and Los Angeles Times, all failed to report the physical attack on Gen. Bolduc that occurred moments before Wednesday’s debate with Democrat Maggie Hassan (D-NH). The media’s decision […]
- Sex Offender Thanks Ketanji Brown Jackson for Three-Month Prison Sentence: ‘She Knew This Was Going to Hold Me Back … So She Didn’t Really Want to Add on to That’
The registered sex offender who was given three months in prison by Judge Ketanji Brown Jackson, nominated for the Supreme Court by President Joe Biden, is speaking out and seemingly thanking the judge for her lenient sentence in his case. In 2013, Jackson sentenced then-19-year-old Wesley Hawkins to three months in prison, three months of […]
- 15 Media Personalities Claimed Hunter’s Laptop Emails Were Likely Russian Propaganda Before New York Times Admitted
Fifteen establishment media personalities claimed Hunter Biden’s laptop emails were likely Russian propaganda before the New York Times admitted it Wednesday. After nearly two years of dismissing Hunter’s tantalizing emails uncovered before the 2020 presidential election, the Times admitted the laptop was authentic, in direct contradiction of many in the Democrat-allied media. The media personalities seemingly went […]
- Covington Teen Nicholas Sandmann Settles $275 Million Defamation Lawsuit with NBC
Covington Catholic High School student Nicholas Sandmann announced Friday that he settled a $275 million defamation lawsuit against NBC. Neither party publicized the terms of the settlement. However, Sandmann asked for $275 million in damages in his lawsuit against NBC Universal and MSNBC. “At this time I would like to release that NBC and I […]
- Washington Post Columnist Calls on CNN to Correct Its Dossier Reporting — After WaPo Corrects Its Own
A Washington Post columnist criticized CNN for not correcting its reporting that the dossier put together by Fusion GPS and ex-British spy Christopher Steele — which claimed the Trump campaign was colluding with Russia — was “corroborated.” The paper’s media critic, Erik Wemple, wrote Friday that CNN hosts and reporters had long-claimed the Steele dossier had […]
