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s Los Angeles reels from devastating wildfires, fueled by a recent windstorm, one analyst is pinpointing a real estate stock that could benefit from the rebuilding efforts.
Piper Sandler's Alexander Goldfarb upgraded Douglas Emmett Inc (DEI) to an Overweight rating, maintaining its $20 price target. The analyst sees the office REIT as a potential long-term winner due to its focus on the West Side of LA, where the largest fires are concentrated in Pacific Palisades, Malibu, and Santa Monica.
The Palisades fire has burned over 23,000 acres, with only 14% contained, while the Eaton fire near Altadena has scorched over 14,000 acres. Estimated economic damage exceeds $50 billion. Goldfarb notes that office space may seem like an unusual pick, but points to the high demand from professionals in need of workspace.
"Rebuilding efforts will drive demand for office space, particularly among lawyers, insurance companies, banks, and architects," Goldfarb said. "Given LA's expensive real estate market, these entities likely require more space than they currently occupy."
