Downgrade to Hold, target price: EUR 6.5 (6.3)

– Downgrade to Hold: Just after the announcement of the voluntary takeover bid by CAI, the stock price of CAII moved close to the offer price of EUR 6.5, overshooting our previous target price slightly. Based on our unchanged forecast and the offer price of CAI, we increase our TP to EUR 6.5 (EUR 6.3) and downgrade our recommendation to Hold, on moderate upside potential.

– Low probability of mark-up: We regard the offer as a good exit opportunity for CAII investors, as the offer price at EUR 6.5 is considerably above the pre-announcement closing price (+22.6%) and the 6- and 12-month VWAPs of 20% and 49%, respectively, but nevertheless 30% below CAII’s last reported BVPS. Based on an already attractive offer price and a statement from the management of CAI, a mark-up seems quite unlikely, in our opinion. The terms could even deteriorate in case of a merger. We therefore recommend accepting the offer or switching into stocks currently traded at a discount to CAII.

– Premium to peers: After the jump in the stock price right after the announcement of the voluntary takeover bid, the discount to last reported BVPS was reduced to 32%, vs. a 38% discount among Austrian real estate companies, on average. In terms of EBITDA, the stock is currently also traded at a premium to its peers.

– FY09 results in line: With a net loss of EUR 123.3mn, CAII came in basically in line with our estimates. In 4Q, the net loss shrank to EUR 16.6mn, mainly on positive tax effects, whereas EBITDA was weaker, on higher operating costs, and the revaluation result remained at the 3Q09 level. Rental revenues rose slightly, on finalized developments.