Tailwind for LEG Immobilien: Analysts' comments boost share price

At the start of the week, the stock landscape of the German real estate sector presents a varied picture, with LEG Immobilien defying the trend and recording gains thanks to positive analyst ratings. While the European sector index Stoxx Europe 600 Real Estate fell by 0.2 percent, investors in LEG Immobilien could enjoy a share price increase of 2.1 percent, driven by upgrades from Barclays and Goldman Sachs. While Barclays continues to view the overall situation in the German residential real estate market with some caution and cannot identify any fundamental changes to the previous year's uptrend in real estate stocks, analyst Paul May sees particularly attractive investment opportunities with LEG. May assesses the sector's sensitivity to interest rates and views the expectation of interest rate cuts as a technically understandable reason for the recent rally in share prices. He downgrades the shares of TAG Immobilien, justifying this with the company's previously above-average performance and a relatively low AFFO (Adjusted Funds From Operations) yield. In contrast, May sees the greatest potential in LEG Immobilien due to its convincing AFFO yield and willingness to undertake capital-intensive measures for investments, substantially raising his rating from "Underweight" to "Overweight" and setting the target price at 90 euros. Goldman Sachs also revises its assessment for LEG, upgrading from "Sell" to "Neutral." Analyst Jonathan Kownator identifies the previously below-average share price performance of LEG as an investment opportunity, despite higher estimated loan-to-value risks and limited divestiture successes in the real estate sector. Real estate values, which have been benefiting from interest rate reduction expectations for months, are now facing growing doubts about whether central banks might delay rate cuts in light of persistent inflation dynamics and a stable economic situation. Nevertheless, it is clear that low interest rates provide a welcome relief for real estate companies, enabling them to finance more cheaply and to implement projects efficiently.