Shore Cap ups rating on British Land, Derwent

The broker said London’s West End office market now looked "poised for a recovery in both rental values and asset prices, helped by strengthening occupier demand, a supply of high quality new development, reimagined sci-tech space and stabilising yields".

It continued: "Let’s be honest, office real estate has been a loveless place since the pandemic, hit by a barrage of blows from changing working practices, higher sustainability requirements and the rocketing cost of debt.

"And while central London has had it tough, regional offices have taken a proper pasting, with the market now increasingly polarised for public real estate investment trusts between investable and non-investable assets.

"However, the fortunes now look to be changing in London’s West End, a unique marketplace with a truly global demand.

"We believe that British Land and Derwent look to be the best-placed listed operators to benefit.

"We like Derwent’s award-wining, design-led development pipeline north of Oxford Street and believe Regent’s Place will be a game changer for British Land. We think both stocks look good value and are now well-positioned to out-perform and upgrade to ‘buy’.”

Shore Cap previously had ‘hold’ ratings on both FTSE 250 stocks.

As at 1100 GMT, shares in British Land were up nearly 2% at 371.8p, while Derwent’s stock was 3% higher at 2,114p.