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16 Sep, 2020 13:11

Berenberg cuts target price on Capital & Regional

capital regional shopping mall1

Analyst at Berenberg slashed their target price on real estate investment trust Capital & Regional from 100.0p to 50.0p on Wednesday, stating "leverage concerns" were growing.

Berenberg said Capital & Regional's community-focused shopping centre assets were better placed versus peers but stated that they would not be immune from further occupational and valuation distress.

With loan-to-value at 57.0%, the German bank expects valuations to likely weaken further and force LTV to 61.3% by December and 67.0% by the end of 2022.

Berenberg acknowledged that central cash reserves at the firm were likely to be "sufficient" to remedy any debt covenant breach in the current year, but warned that there was a "significant risk" that a breach will occur in 2021 - when further waivers cannot be agreed.

"This would result in either the surrender of assets to lenders or another, highly dilutive, balance sheet recapitalisation," said the analysts, which also reiterated their 'hold' rating on the stock.

"While our forecasts assume that central cash is sufficient to cure any breach across our forecast horizon, tolerances in assumptions are tight."

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Pilling and Co Stockbrokers Ltd. is not responsible for the content or accuracy of third party news articles and we may not share the views of the author.

We provide third party news for your convenience and information only and make no representation or endorsement whatsoever and hereby exclude all liability for any loss or damage that may be incurred by you as a result of your access or use. Please note that third party content may be subject to terms and conditions imposed by the third party owner of that content.