EU REAL ESTATE: Property: Week in Review

• CityCon was trashed up to +105 wider in seniors following a takeover offer from G City/Gazit. The group announced that their stake had exceeded 50% and now stood at 57.45%, triggering a mandatory offer. S&P specifically said that an increase in this stake would be negative given the higher leverage at the Israeli group.
• AXA Logistics issued €500m 5.5yr ms+100 with a €200m tender for 26s. Bonds came in line with the recent CBRELP deal, adjusted for the shorter maturity.
• Vonovia €2.25bn 3-tranche came 5-10 wide of our fair value. The 7 & 11yr were 3bps better in secondary; 15yr -1bp. The outstanding curve was +5 wider in line with the sector.
• New Immo – the spin-off from ELO/Auchan – brought its first issuance since the reorganisation. The company has not paid a dividend to Elo since 2019 but may resume paying 2-3% of NAV after 2026. The issuer is financially separate from the parent – there are no intercompany loans or cash pooling. Bonds have standard leverage covenants which offer protection. We are concerned at the low rent collection (91.1%) which implies a poor-quality business. Low LTV and a €7bn portfolio are supportive. The 5yr came just outside AOXGR.
• VGP and CTP had solid results. IWG continues to grow its capital-light unit. Altarea has stabilised the Retail division and is seeing orders return in development. 

(Chart omits CITCON)