Citycon (Sell, TP: EUR4.00) - Hybrid headaches; down to SELL
Citycon’s two hybrid bonds with call dates in 2024–2026 made up c15% of its end-Q3 balance sheet (excluding goodwill); we estimate not calling them would carve out c30% of 2023e run-rate FFO, leaving a risk 2027e FFO would barely cover capex. While the Q3 results were in line with expectations, Citycon still pays quarterly DPS in 2023, meaning deleveraging hinge on selling assets in today’s illiquid market. We have downgraded Citycon to SELL (HOLD) and cut our target price to EUR4 (6).Citycon is an active owner, operator and developer of shopping centers. Co. aims to increase its net yield from shopping centers over the long term through active retail property management and systematic redevelopment efforts. Co. is involved in the day-to-day operations of its shopping centers. As of Dec. 31, 2011, Co. owned a total of 36 shoppings centers: 23 in Finland, 9 in Sweden, 3 in Estonia, and one in Lithuania. Co. also owns 43 other retail properties: 36 in Finland and 7 in Sweden and one undeveloped lot in Finland. Co. manages two commercial shopping centers in Finland.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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