Citycon (Sell, TP: EUR3.50) - Dividend decision hard to understand
With its Q4 results (15 February), Citycon surprised us by proposing a EUR0.3/share dividend. However, the following week, it issued 11.7m new shares at a steep NAV discount, and yesterday it issued a 5-year bond with a 6.5% fixed coupon. With current market interest rates, we are concerned the ICR may now fall below IG levels. We continue to expect asset sales but believe they could be below book values and involve some of the higher-yielding assets in the portfolio. We reiterate our SELL and have cut our target price to EUR3.5 (4).