Nordic Credit Rating (NCR) said today that it had assigned a 'BBB' long-term issuer rating to Sweden-based commercial property manager Bonnier Fastigheter AB (Bonnier Fastigheter). The outlook is stable.
Rationale
"The rating reflects the company's high-quality property portfolio and its focus on office premises in central Stockholm and Uppsala," said NCR credit analyst Marcus Gustavsson.
The rating also reflects Bonnier Fastigheter's high occupancy rate and low financial gearing; as of 31 Aug. 2020, the company's loan-to-value (LTV) ratio was 27% (as adjusted by NCR).
These strengths are offset by Bonnier Fastigheter's small and concentrated portfolio, which comprises only 16 properties with the top 10 tenants accounting for 47% of rental revenues. The rating also reflects the company's large project development pipeline with speculative elements, and its ambition to expand the portfolio substantially and increase leverage. Furthermore, the rating is constrained by the company's large single-year debt maturities, which increase refinancing risk.
Outlook
The stable outlook reflects our expectations that Bonnier Fastigheter will maintain strong financial metrics, albeit somewhat weaker than historically. We also expect a stronger business profile due to a larger and less concentrated property portfolio, possibly with meaningful residential exposure. Furthermore, we expect the company to refinance upcoming debt maturities successfully. We could raise the rating if the company successfully completes residential projects resulting in an increased share of residential properties under management or increases its focus on office and residential premises. We could lower the rating if the company fails to refinance upcoming debt maturities, if market fundamentals deteriorate and profitability declines, or if credit metrics weaken substantially such that LTV rises above 50%.
Rating list
| Rating | |
|---|---|
| Long-term issuer credit rating: | BBB |
| Outlook: | Stable |
| Short-term issuer credit rating: | N-1+ |
| Senior unsecured rating | BBB |
All research for this issuer is available here.
If you have any questions, please contact:
Marcus Gustavsson, credit rating analyst, +46700442775, marcus.gustavsson@nordiccreditrating.com
Mille O. Fjeldstad, credit rating analyst, +4799038916, mille.fjeldstad@nordiccreditrating.com
The methodology documents used for this rating are NCR's Corporate Methodology published on 14 Aug. 2018 and NCR's Rating Principles published on 16 Sep. 2019. For the full regulatory disclaimer please see the rating report.