Jefferies analyst Mike Prew has upgraded a raft of real estate stocks to ‘buy’ and predicted a wave of M&A activity in the listed property sector.

Since the coronavirus outbreak, real estate share prices have fallen to a point where many companies now look good value and could become acquisition targets, Prew said in an investor note this morning. 

He said: “Our REIT forecasts are downgraded but stocks trading on deep discounts with relative dividend yield attractions look increasingly biddable and possible candidates for consolidation.”

The analyst upgraded 11 stocks to ‘buy’ including Landsec, Derwent London, SEGRO, Grainger and Safestore. However, he cautioned that retail REITs Hammerson and intu remained “uninvestable”.

Prew said the current market crisis had more in common with 2000, when real estate shares traded at half their NAVs, than 2008. He said the sharp discounts in 2000 led to £16bn of public real estate being privatised, something that is now on the cards again.

“REITs look susceptible to bids and the evolution of share registers is becoming less tolerant of underperforming managements,” he said.