airdone
Morgan Stanley shuffled up its suggestions on a lot of REITs inside its protection as analyst Ronald Kamdem takes into consideration the truth that REITs traditionally outpace the inventory market after the Federal Reserve pauses interest-rate hikes.
“Whereas [the] +23% rally since October was pushed by larger levered REITs, we see one other leg larger w/ rate-sensitive sectors main,” Kamdem wrote in a be aware. The Fed has left its benchmark lending charge regular at 5.0%-5.25% for the previous three conferences, and has referred to as for 3 charge cuts sooner or later in 2024.
Total, the sell-side analyst is Impartial on the group — which has a barely larger valuation than honest worth — “although we’re positively inclined as dangers skew to upside.”
Among the many REITs he upgraded embody Regency Facilities Corp. (NASDAQ:REG) (to Obese) and Further House Storage (NYSE:EXR) (to Equal-Weight).
In contrast, he downgraded Highwoods Properties (NYSE:HIW) to Underweight and reiterated Vornado Realty Belief (NYSE:VNO) at Underweight, as workplace REITs’ latest rally “is probably going on its final lag.”
As for the rate-sensitive sectors, Kamdem reiterated Obese rankings on Agree Realty Corp. (NYSE:ADC), Gaming and Leisure Properties (NASDAQ:GLPI), SBA Communications Corp. (NASDAQ:SBAC), Safehold (NYSE:SAFE) and Cushman & Wakefield (NYSE:CWK). “Curiosity-rate-sensitive sectors are undervalued and supply essentially the most compelling risk-adjusted returns,” the be aware mentioned.
He additionally thinks defensive progress sectors can hold outperforming this 12 months, reiterating Obese on Prologis (NYSE:PLD) and Welltower (NYSE:WELL).