Nordic Credit Rating (NCR) has affirmed its 'BBB-' long-term issuer rating on Sweden-based property manager CA Fastigheter AB. The outlook is stable. At the same time, NCR affirmed its 'N4' short-term issuer rating.
Rating rationale
The affirmation reflects continued performance in line with our expectations. We expect CA Fastigheter's net loan to value (LTV) to increase temporarily due to the acquisition of Lidingö shopping centre (Lidingö Centrum) in early 2025 and continued high project investments, before stabilising over our forecast period through 2027 as development projects are finalised.
These strengths are offset by the company's active project and development activities and associated capital expenditure, which create cash flow volatility and have a higher risk than pure property management. We also view CA Fastigheter's intra-group lending and short debt maturity profile with large single-year maturities as credit weaknesses in our standalone assessment. We consider CA Fastigheter's market position to be modest, given the relatively small portfolio in most of its core geographic locations.
Stable outlook
The stable outlook reflects our expectation that CA Fastigheter's credit metrics will temporarily weaken due to its acquisition of Lidingö shopping centre (Lidingö Centrum) in early 2025 and increased capital spending on projects. However, we assume its credit metrics will remain above our potential negative rating drivers during our forecast period through 2027. We expect CA Fastigheter will complete the sale of current tenant-owned property projects and will continue to generate stable cash flow. We believe the company will experience limited impact from slightly higher vacancies in its portfolio due to the weak macroeconomic environment.
We could raise the rating to reflect improved credit metrics (EBITDA to net interest sustainably over 3.5x and net LTV sustainably below 35%) or to reflect reduced risk appetite and an extended debt maturity profile.
We could lower the rating to reflect increased financial gearing (net LTV at levels sustainably over 50% or EBITDA to net interest below 2.2x over a protracted period), deteriorating market fundamentals that affect occupancy and/or profitability, or to reflect increased lending exposure to, or deteriorating credit quality of, its owner CA Group.
| Rating list | To | From |
|---|---|---|
| Long-term issuer credit rating: | BBB- | BBB- |
| Outlook: | Stable | Stable |
| Short-term issuer credit rating: | N4 | N4 |
Contacts:
Yun Zhou, analyst, +46732324378, yun.zhou@nordiccreditrating.com
Elisabeth Adebäck, analyst, +46700442775, elisabeth.adeback@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.