Lifestyle Communities' (ASX:LIC) interest cover ratio covenant may come under pressure, as short-term sales could weaken due to negative publicity surrounding a recent Tribunal ruling about its deferred management fees, said Citi analyst Suraj Nebhani, according to a Thursday The Australian report.

The company on Tuesday said it is weighing a potential appeal after a ruling by the Victorian Civil and Administrative Tribunal (VCAT) upheld deferred management fees but declared some of its agreements void.

Citi has removed all deferred management fees from its financial estimates and valuation of the company, the report added.

Citi has downgraded the company to neutral/high risk and has cut its 12-month target price 50% to AU$4.50.

The company's shares rose 8% on market close.