Corio takeover 'unlikely', analysts say

Analysts have played down reports suggesting that Dutch shopping centre operator Corio is set to be taken over, saying such a move is 'unlikely'.

UK-based listed property group Hammerson and German retail specialist ECE as well as listed retail giant Unibail-Rodamco have all recently been named as possible merger partners for Corio as speculation mounted about a potential takeover driven by the company shares' discount to net asset value.

However, analysts say investors 'should not be overly excited about Corio’s development pipeline'. 'Though it has been mentioned several times, we do not think that Unibail-Rodamco is a buyer for Corio as this would mean that portfolio optimisation would have to be initiated again,' commented Kai Klose, an analyst with Berenberg Bank in London.

Unibail-Rodamco now has an almost optimised portfolio structure and will therefore be very cautious before diluting its portfolio quality again - which would presumably occur if Corio’s assets were taken on board, regardless of an attractive entry price, Klose said in a note to clients.

Corio declined to comment on the rumours. The company is trading at a 14% discount to NAV, compared to a 5% premium showed by its peers.

Berenberg Bank has reiterated its sell rating with a slightly reduced price as it sees further downside risk for Corio's portfolio. The company foresees further yield expansion of 20 basis points in 2012. 'We regard the underperformance of Corio’s share year-to-date justified and would expect the valuation discount to widen further,' Klose added.