Berenberg cuts target price on Capital & Regional

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."