Nordic Credit Rating (NCR) said today that it had assigned a 'BBB-' long-term issuer rating to Sweden-based property manager and developer CA Fastigheter AB (CA Fastigheter), which is 100% owned by Claesson & Anderzén AB (CA Group). The outlook is stable. At the same time NCR assigned an 'N-1' short-term issuer rating.
Rationale
The long-term rating reflects the company's history of long-term investments, relatively low financial gearing and diversification benefits from the company's share of residential properties and low tenant concentrations in its commercial portfolio. It also reflects our expectations that the residential rental market will remain strong and that the company will continue to increase rental income from its commercial portfolio.
These strengths are offset by the company's active project and development activities, which create volatility in cash flows and have a higher risk than the investment portfolio. We also view CA Fastigheter's intra-group lending and short debt maturity profile as credit weaknesses in our standalone assessment. We consider CA Fastigheter's market position to be moderate, given the relatively small portfolio in most of its core geographic locations.
Stable outlook
The stable outlook reflects our expectation that the company's investment properties will continue to generate stable cash flows, allowing it to invest in future projects for its own portfolio. We also expect CA Fastigheter to complete the sale of its tenant-owned property projects at a profit, reducing the need for further gearing on its future investments. We could raise the rating to reflect improved credit metrics, a less concentrated debt maturity profile or an increased share of non-cyclical rental revenues. We could lower the rating to reflect increased financial gearing, deteriorating market fundamentals or an increased exposure to risks within CA Group.
| Rating list | Rating |
|---|---|
| Long-term issuer credit rating: | BBB- |
| Outlook: | Stable |
| Short-term issuer credit rating: | N-1 |
If you have any questions, please contact:
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com
Marcus Gustavsson, credit rating analyst, +46700442775, marcus.gustavsson@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.