Source: Sharecast
Berenberg said that if one simply focuses on the near-term, it acknowledged that the Berkeley investment thesis faces headwinds. Most notably, the German bank said near-term headwinds stemmed from Berkeley's longer-duration model, delivering a further decline in profit in 2026, and noted that the company's strategic move into build-to-rent could "pressure returns" in the near term.
However, over the medium-term, Berenberg sees "a compelling proposition" and thinks that Berkeley's position as a developer of large, complex urban regeneration schemes presents "significant growth opportunities", while its margin resilience in recent years illustrates its financial discipline.
"With the company trading at the low end of its 20-year TNAV multiple range, we remain positive, albeit noting the lack of near-term positive catalysts," said Berenberg, which reiterated its 'buy' rating on the stock.
Berenberg also highlighted that the company had confirmed its Berkeley 2035 strategic plan to put £2.0bn towards its 4,000-unit build-to-rent portfolio, allocate a further £2.0bn to shareholder returns, and make a final £1.3bn available to allocate to either of the aforementioned on an opportunistic basis. Berenberg noted that Berkeley was pleased with the early progress of its buy-to-rent portfolio as it discussed possible options to crystallise the value of the asset in the future.
"We note that its minimum shareholder return is equal to 5% per year, at current market cap, over the next 10 years, while it could be as high as 8% per year if the flexible £1.3bn is also returned to shareholders," added Berenberg.
Reporting by Iain Gilbert at Sharecast.com