Numis upgrades British Land and Land Securities but notes lack of risk appetite

Numis upgraded its recommendations on British Land and Land Securities to reflect their improved capital value assumptions for the pair, which had been overly bearish, even as it expressed a preference for small and mid-cap firms because of the risk aversion prevalent among management teams.

On the back of the latest full-year 2016 results from the sector, Numis said: "looking forward, we see little changing. Capital values are unlikely to collapse in either London or Retail so to differentiate themselves, REITs will need to actively create value but risk appetite is largely absent.

"The dominant theme, however, has been one of positioning for a disorderly unwind of the cycle (with Brexit an additional factor not the sole driver) rather than to exploit opportunities," they said.

Furthermore, the longer that uncertainty around the EU persisted there was even less reason to invest in the majors, it believed.

Admittedly, Land Securities and Great Portland Estates were moving in the right direction by committing to new schemes.

Yet the benefits of such initiatives would take time to come through, according to Numis.

The broker nonetheless upgraded its stance on British Land and Land Securities from 'reduce' to 'hold', where they joined Great Portland Estates.

Hammerson and Intu Properties on the other hand were kept at 'reduce', with Numis labelling their dividend yields as "superficially attractive".

Derwent London and Helical remained a 'buy'.