The Globe and Mail reported on Friday edition that Scotia Capital analyst Himanshu Gupta believes there is "tremendous value" in European Residential REIT. The Globe's David Leeder writes that even still, Mr. Gupta downgraded European Residential to "sector perform" from "sector outperform." Mr. Gupta cut his unit target by a loonie to $4. Analysts on average target the units at $4.15. Mr. Gupta calls the REIT's valuation "compelling." He believes the company's leadership is "well-positioned to navigate any regulatory uncertainties in the Netherlands." Mr. Gupta made his negative rating tweaks after European Residential's first quarter results fell short of his estimates. He says it was "a difficult decision." Mr. Gupta says in a note: "A few reasons for a change in rating: (1) Lack of FFO [funds from operations] per unit growth (and higher leverage) -- we expect negative FFOPU growth (down 3.2 per cent year-over-year in 2023 and a negative 0.2-per-cent CAGR [compound annual growth rate] in 2022-24). ... Per unit growth is key to outperformance. (2) European residential names are trading at larger discounts to NAV as they face double-impact of spike in debt financing costs and regulatory uncertainties."