Kwarkot
Paramount Group (NYSE:PGRE) stock slid as much as 2% in Wednesday morning trading after Morgan Stanley analyst Ronald Kamdem downgraded the office REIT to Equal Weight from Outperform on the basis of higher odds that it faces earnings growth headwinds.
The analyst pointed out that those headwinds namely come from three large lease expirations over the next two years as well as from floating rate debt, he wrote in a note to clients.
A group of seven analysts, meanwhile, expect PGRE's FFO to be 0.98 a share in 2022, implying Y/Y growth of 6.2%. But in 2023, FFO is expected to decelerate to $0.95 a share and then slide further to $0.88 in 2024.
On a broader note, "we believe a more challenging capital market environment may make unlocking the private market value of the company more challenging in the intermediate term," Kamdem explained.
He also reiterated Vornado Realty Trust (NYSE:VNO), -0.3%, and Office Properties Income Trust (NASDAQ:OPI), -1.8%, at Underweight, as the office REIT space faces headwinds from interest expenses, elevated operating expenses and expectations for tenant moveouts in 2023.
Take a look at the Quant system's list of the best-rated apartment REITs.