Berenberg reiterates 'buy' rating on Urban & Civic

Analysts at Berenberg reiterated their 'buy' rating on real estate developer Urban & Civic on Wednesday, stating there was "significant upside" to its "misunderstood" model.

Berenberg stated that since the start of the Covid-19 pandemic, Urban & Civic had underperformed the UK real estate sector by 25.5%.

However, the analysts said they continue to think that the underperformance was "unjustified" and said that investors were continuing to overlook the cross-cycle resilience of Urban & Civic's strategic land model.

The German bank said the upside to the group's model was still to come from a ramp-up in activity across immature sites, the potential for build-to-rent development to "boost returns significantly", the increased demand within core markets and its strong environmental, social and corporate governance credentials, which it feels should make the company "a core real estate holding for any ESG fund".

"Urban & Civic trades at a CY 2020 P/NAV of 0.61x, a 25% discount to the sector on 0.82x, and a discount of 57% to the last reported valuation excluding the large site discount," concluded Berenberg, which also reiterated its 'buy' rating on the stock.