Piper Sandler Downgrades Newmark, Hudson Pacific and BXP to Neutral on Deal Slowdown and Macro Volatility

Piper Sandler downgraded NMRK, HPP and BXP to Neutral from Overweight on Monday, October 19. It lowered its Newmark price target to $13.00 from $14.00, with the stock at $11.86, down 31% year to date and near its 52-week low of $11.38.

The Newmark call is about fundamentals. Piper expects lower transaction volumes in commercial real estate, citing conversations with brokers and private market participants that deal flow has slowed after an approximately 75 basis point increase in the 10-year Treasury yield since July. Price reductions have been minimal so far, at about 5%, and deals still early in discussions are likely to face the greater impact. Piper also expects Newmark's mortgage revenue to slow as borrowers choose short-term extensions over long-term refinancings.

The two office REIT calls are valuation calls. Piper cut its Hudson Pacific target to $13 from $15, based on about 10 times its 2027 funds from operations estimate, down from about 11 times. It cut BXP to $64 from $72, based on about 9 times 2027 FFO, down from about 10 times, with the stock at $59.20. In both cases the firm said the lower multiple reflects increased volatility in the macro environment. Hudson Pacific traded at $10.30 after a roughly 15% decline over the past week.

Taken together, the notes say higher long-term yields are now hitting commercial real estate through two channels: fewer transactions for brokers like Newmark, and lower multiples for office landlords. Investors will look to the coming third-quarter reports for evidence on deal volumes, mortgage activity and office leasing.