UPDATE: Stifel Nicolaus Downgrades Douglas Emmett to Hold on Valuation, Conditions

Stifel Nicolaus reduced its rating on Douglas Emmett (NYSE: DEI) from Buy to Hold and removed its previous $25 price target. Stifel Nicolaus noted, "We are downgrading from Buy to Hold based on valuation (DEI is up 26.9% YTD vs the RMZ up 11.9%), and on our belief that rental rate increases may take longer to materialize than promised. Negatives include 1) outside of West L.A., Encino and Sherman Oaks fundamentals in the greater L.A. County market continue to be soft, 2) persistent rent roll-downs, as evidenced by the 13%/5% cash/GAAP roll-downs in 3Q12. and 3) the possibility of cap rate expansion and multiple contraction as investors realize that the primary DEI office submarkets are not performing that much better than the multitude of generic office markets nationwide."Douglas Emmett closed at $23.15 on Tuesday.