Barclays lifts Kojamo, I-RES ratings; cuts Grainger on low yield

Published 11/06/2025, 12:36
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Investing.com -- Barclays (LON:BARC) has upgraded Kojamo (HE:KOJAMO) and Irish Residential Properties REIT (I-RES) to “overweight, while downgrading Grainger to “equal weight.” 

The ratings changes are based on the brokerage’s emphasis on earnings yield and growth potential over pure earnings growth in the current market environment.

In the case of Kojamo, Barclays analysts cited signs of stabilization following the disposal of a significant portion of its held-for-sale portfolio, which has improved visibility around its earnings trough. 

Kojamo’s earnings yield is now forecast to exceed 5%, and combined with a projected EPS CAGR of 3.1% from FY25 to FY29, the company is expected to surpass the 8% total return threshold Barclays sees as necessary to attract marginal investors. 

Barclays analysts noted that Kojamo remains exposed to an oversupplied Finnish residential market but believes deleveraging, solid occupancy gains, and reduced refinancing headwinds support the upgrade.

I-RES has also been upgraded to Overweight, with Barclays pointing to asymmetric upside potential from possible changes in Ireland’s rental regulations. 

Current rules cap rent increases at 2% annually on units rather than tenants, but proposed reforms may allow landlords to reset rents to market levels once a tenant leaves. 

Without assuming any regulatory relaxation, I-RES offers an EPS yield of 5% and a free cash flow yield exceeding 3.5%, which Barclays considers attractive. 

Under a scenario where 15% of rents are reset annually from FY26, EPS CAGR could reach 6.8% through FY29, and yield could rise to 7%, making it the highest among the companies covered in this review.

Conversely, Grainger has been downgraded to “equal weight.” Although the company maintains one of the strongest earnings growth profiles among peers, with an EPS CAGR of 14% through FY29, Barclays emphasized that its starting earnings yield of just 2.6% in FY25, rising to 4.6% in FY29, is insufficient in the current income-focused investment climate. 

The downgrade also reflects concerns about slowing growth after Grainger’s conversion to a U.K. REIT in FY26 and future refinancing risks, with cost of debt expected to exceed the company’s net portfolio yield.

The new price targets reflect these changes. Kojamo’s target rises to €12.50 from €10.20, I-RES increases to €1.20 from €0.95, and Grainger’s is cut to 225p from 270p.

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