Berenberg initiates coverage on Shaftesbury and Capital & Counties at ‘buy’

by | Jul 7, 2021

Analysts at Berenberg initiated coverage on UK real estate firms Capital & Counties and Shaftesbury at ‘buy’ on Wednesday, stating both companies remained “well positioned to outperform” as the sector’s recovery builds.
Berenberg said prime London landlords Shaftesbury and CapCo had been “hit hard by the Covid-19 pandemic”, with valuations falling 8.4%, earnings turning negative and share prices still 36% below pre-pandemic peaks.

However, the analysts stated that as the UK reopens, footfall rebuilds and occupational demand returns, operations were now at an inflection point.

Although Berenberg admitted there was an “outside chance” of further restrictions next winter and travel restrictions that were likely to delay the return of international tourists, it also expects to see an increase in domestic footfall to boost footfall across the West End.

While the German bank initiated with a ‘buy’ rating on both companies, it highlighted that Shaftesbury remained its “top pick” for long-term growth – with lower financial gearing, unchallenging valuations, lower in-place rents and a better asset mix.

“At current valuations, both Shaftesbury and CapCo – with irreplaceable assets and a strong operational recovery forecast – remain attractive in our view,” said Berenberg, which hit the former with a 725.0p target price and the latter with one of 200.0p.

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