January 8, 2009 / 4:21 PM / 10 years ago

UPDATE 1-RESEARCH ALERT-Goldman Sachs downgrades 4 REITs

Jan 08 (Reuters) - Goldman Sachs downgraded four real estate investment trusts (REITs), saying it remained cautious on the commercial real estate industry and expected flat to negative 15 percent total returns in 2009.

The brokerage removed Public Storage (PSA.N) from its conviction buy list and downgraded Vornado Realty Trust (VNO.N) to “neutral” from “buy.”

It also downgraded CBL & Associates Properties Inc (CBL.N) and UDR Inc (UDR.N) to “sell” from “neutral.”

In a note to clients, analyst Jonathan Habermann said he expects REITs to deliver sub-par returns for the year.

“The continuing turmoil in the credit markets has resulted in a sharp reduction in the availability of debt capital for the CRE (commercial and real estate) industry, even for assets with performing loans, not to mention record wide spreads,” he added.

The broker also cited limited financing options, even for REITs with better-positioned balance sheets, along with deteriorating fundamentals as the reason for forecasting yet another negative year for the industry. (Reporting by Biswarup Gooptu in Bangalore; Editing by Anil D’Silva)

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