The European property industry should ‘hope for the best, prepare for the worst’ in 2009, according to Citi’s latest report.
Most companies can withstand another 30% fall in property values, the pan-European real estate briefing said, but all would benefit from more equity to avoid breaching covenants.
The top UK REITs, such as Segro and Liberty, may need equity. Citycon is the first European company to hit potential covenant problems, the report said. However most European REITs, such as Wereldhave, as well as Central London REITs such as Great Portland Estates, look the most comfortable.
The report also suggested that Land Securities would have needed additional equity to remain within its covenant limits had it not agreed the sale of Trillium to Telereal for £750m.