Jefferies says European real estate risk shifts from debt to property valuations

** Jefferies says that higher-for-longer interest rates have shifted the main risk for European real estate companies from refinancing debt to further declines in property valuations

** Higher funding costs and wider assets value discounts are making acquisitions and other forms of external growth less attractive, increasing the importance of organic growth and capital allocation, it says

** Even so, the brokerage believes much of the pain is already reflected in share prices, creating selective opportunities for investors

** It upgrades Merlin Properties MRL.MC, Catena CATE.ST, Great Portland Estates GPEG.L and Target Healthcare REIT THRLT.L to "buy" from "hold", saying recent sell-offs have become overdone and now the stocks offer an attractive risk-reward profile

** Land Securities LAND.L and Derwent London DLN.L get upgraded to "hold" from "underperform" on reduced earnings downside risks, improved operating performance and discounted valuations

** It cuts Workspace WKP.L to "hold" from "buy", citing refinancing and execution risks, and Icade ICAD.PA to "underperform" from "hold" on weak earnings visibility and limited catalysts for a near-term recovery