REAL ESTATE: Property: Week in Review

Property was around 4bps wider on average. Results for the sector have been almost entirely slightly positive, but the sharp repricing of the bund curve is still a challenge to an industry which relies on rolling over debt.
• CityCon finally tested the patience of the agencies. Moody’s withdrew its Ba1*- rating citing lack of cooperation. S&P followed by cutting the Issuer Credit Rating to BB+, whilst leaving Senior Unsecured at BBB-. The perps were cut to B+. Disposals are challenging in a soft market and CityCon required a vendor loan to facilitate sales. Management turnover was also referenced as concerning.
• Alstria Office (BB+ neg) issued its first bond since 2020 in conjunction with a tender of three shorter dates. The company is exiting the REIT structure which it sees as allowing it more flexibility to preserve cash. On the roadshow, AOXGR highlighted the discount its properties trade to both reinstatement cost and to estimated rental value.
• Sagax was the only other issuer with a small €300 7yr.