Deutsche Bank backs commercial real estate, upgrades VGP and Montea

Investing.com -- Deutsche Bank reiterated its preference for commercial real estate in Europe and raised ratings and price targets across several listed property companies, citing expectations of an economic recovery next year and higher long-term interest rate forecasts.

Analyst Thomas Rothaeusler said commercial properties remain favored over residential, with logistics highlighted as the strongest subsector. 

He noted a recovery this year driven by high leasing activity and solid operations, adding that tenant demand continues to show positive momentum. 

According to the brokerage, take-up in Western European markets including Germany, the Netherlands and Belgium has recently strengthened.

Deutsche Bank named Merlin Properties, Gecina and CTP as top picks. The brokerage said logistics remains the preferred subsector due to earnings growth and valuation levels and upgraded VGP and Montea to “buy” from “hold.” CTP was maintained as the top pick within logistics.

The brokerage issued rating and target-price changes across the sector. Aroundtown was kept at “hold,” with the target price raised from €3 to €3.30. 

Colonial stayed at “hold,” with its target moved from €6 to €5.50. Deutsche Wohnen was maintained at “buy,” with a revised target of €27 from €29. 

Gecina remained at “buy,” and the target shifted to €100 from €109. Icade was unchanged at “hold,” and the target moved to €21 from €22.

Instone Real Estate remained "hold," with the target lowered to €8 from €10. LEG was upgraded to “buy” from “hold,” with its €78 target unchanged. 

Montea was upgraded to “buy” from “hold,” and the target moved to €85 from €65. Merlin Properties stayed “buy,” and the target rose to €15 from €13. TAG remained “buy,” with the target adjusted to €18 from €19.

Unibail-Rodamco-Westfield stayed “buy,” with the target raised to €105 from €95. VGP was upgraded to “buy” from “hold,” and the target increased to €120 from €92. 

Vonovia remained “hold,” with the target revised to €28 from €30. WDP stayed “buy,” and the target moved to €26 from €25.