BXP initiated with a Hold at Deutsche Bank

Deutsche Bank initiated coverage of BXP with a Hold rating and $74 price target. The analyst initiated coverage of U.S. office real estate investment trusts with two Buys and four Holds. The office sector will continue to exhibit a difficult leasing environment as lower office utilization due to work-from-home/hybrid work causes tenants to keep re-thinking space, often resulting in footprint reductions, the analyst tells investors in a research note. The firm also expects elevated concessions, tenant improvements and leasing commissions in order to stimulate demand, all of which will weigh on funds from operations and cash flows. However, office will disproportionately benefit if rates decline, given the generally higher leverage across the sector relative to other REIT sectors, adds Deutsche Bank. The firm has a preference for life science versus traditional office given the positive long-term secular demand drivers around finding cures for several known diseases.