Nordic Credit Rating said today that it had affirmed its 'BBB-' long-term issuer rating on Sweden-based property manager Bonnier Fastigheter AB. The outlook is stable. At the same time, the 'N3' short-term issuer rating and 'BBB-' issue rating on senior unsecured bonds issued by subsidiary AB Bonnier Fastigheter Finans (publ) were affirmed.
Rating rationale
The affirmation of the issuer rating reflects the company's high-quality property portfolio and its primary focus on office premises in central Stockholm and Uppsala. The rating also reflects the company's sound financial gearing, albeit increased after recent acquisitions, and adequate liquidity position. Recent growth with widened residential exposure is improving diversification. The rating factors in an operating environment supported by continued strong demand for office premises in prime locations.
These strengths are partly offset by Bonnier Fastigheter's small and concentrated property portfolio comprising some 20 properties, with the top 10 tenants accounting for around 35% of rental income. The rating also reflects the near-term pressure on margins and rapidly increasing financing costs owing to mounting debt from earlier acquisitions and higher interest rates.
We could raise our rating to reflect improved credit metrics, including a net loan-to-value ratio below 35% and net interest coverage above 3.5x over a protracted period. We could also raise the rating if we observed an increased proportion of residential properties under management, combined with stronger and more stable credit metrics.
We could lower the rating to reflect weakened credit metrics, including net loan-to-value approaching 50% or net interest coverage below 2.2x over a protracted period, or to incorporate deteriorating market fundamentals that dampen profitability and/or occupancy.
| Rating list | To | From |
|---|---|---|
| Long-term issuer credit rating: | BBB- | BBB- |
| Outlook: | Stable | Stable |
| Short-term issuer credit rating: | N3 | N3 |
Contacts:
Elisabeth Adebäck, analyst, +46700442775, elisabeth.adeback@nordiccreditrating.com
Yun Zhou, analyst, +46732324378, yun.zhou@nordiccreditrating.com
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com
The methodology documents used for this rating are NCR's Corporate Rating Methodology published on 8 May 2023, NCR's Rating Principles published on 14 Feb. 2024 and NCR's Group and Government Support Rating Methodology published on 14 Feb. 2024. For the full regulatory disclaimer please see the rating report.