Skip to main content

Market Overview

Goldman On REITs: Buy SL Green, Sell Paramount Group

Goldman On REITs: Buy SL Green, Sell Paramount Group

Despite employment numbers at more than a 10-year high, investors should think twice about investing in office REITs. Cooling in demand coupled with cyclical highs in supply means investors will need to be extremely selective in the office REIT space, according to Goldman Sachs analyst Andrew Rosivach.

However, despite hitting peak supply, office REIT bulls still have reason for optimism.

“Office supply nationally is below most other CRE property types and at levels lower than the end of the prior cycle (which cannot be said for apartments, senior housing or hotels) and is seeing less expansion than multifamily or hotels in gateway markets,” Rosivach wrote.

Related Link: This Week's REIT-Heavy IPOs

In addition, the office sector is currently trading at a 3-percent FFO premium to the rest of the REIT space, slightly below its historical 7-percent premium.

Overall, Goldman is neutral on office REITs at the moment, but the firm is more constructive on some names than others.

Goldman has a Buy rating and $121 price target for SL Green Realty Corp (NYSE: SLG), noting that “signed leases provide visibility into 2018 earnings.”

At the same time, Goldman has a Sell rating and $15 price target on Paramount Group Inc (NYSE: PGRE). Rosivach notes growth challenges in markets facing an uptick in supply (check out Rosivach's track record).

In addition, Goldman maintains Neutral ratings on Boston Properties, Inc. (NYSE: BXP), Empire State Realty Trust Inc (NYSE: ESRT) and Columbia Property Trust Inc (NYSE: CXP).

So far in 2017, U.S. real estate investments have lagged the returns of the S&P 500. The iShares US Real Estate ETF (NYSE: IYR) is up just 4.7 percent year to date.

Latest Ratings for SLG

Jan 2021Morgan StanleyMaintainsEqual-Weight
Dec 2020Morgan StanleyMaintainsEqual-Weight
Nov 2020Evercore ISI GroupUpgradesUnderperformIn-Line

View More Analyst Ratings for SLG
View the Latest Analyst Ratings


Related Articles (SLG + PGRE)

View Comments and Join the Discussion!

Posted-In: Andrew Rosivach Goldman SachsAnalyst Color REIT Price Target Initiation Analyst Ratings Real Estate Best of Benzinga

Latest Ratings

VORStifelInitiates Coverage On58.0
VORGoldman SachsInitiates Coverage On19.0
TERNJP MorganInitiates Coverage On32.0
TERNCowen & Co.Initiates Coverage On
TERNGoldman SachsInitiates Coverage On29.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at