Nordic Credit Rating said today that it had affirmed its 'BBB+' long-term issuer rating on Sweden-based community service property manager Intea Fastigheter AB (publ) (Intea). The outlook is stable. At the same time the 'N-1+' short-term issuer rating and the 'BBB+' senior unsecured issue rating were affirmed.
Rationale
The affirmation reflects Intea's relatively low-risk portfolio of largely tailor-made properties and its generally long contracts with highly creditworthy public-sector tenants within the education, healthcare, and law enforcement sectors. The rating reflects the strong operating environment as well as Intea's stable cash flows, strong profitability, and debt-servicing capabilities. We view the company's strong and committed owners and long interest rate fixing as credit strengths.
These strengths are offset by Intea's overall financial risk profile; the company's credit metrics are notably weak in comparison with those of its peers, for which we have calibrated our ratio assessment. The rating is constrained by the company's limited property portfolio, high tenant concentrations, and restricted geographic scope with concentration risk in certain municipalities.
Stable outlook
The stable outlook reflects our expectation that Intea will maintain its focus on specialised community service properties with long lease contracts funded by government-backed counterparties. We expect Intea to continue growing primarily through project development to counterbalance yield compression at existing properties. The outlook also reflects our expectation that Intea will successfully complete its current project properties on schedule and maintain its financial risk profile. We could raise the rating to reflect improved credit metrics or the completion of major projects and increased diversification. We could lower the rating to reflect increased risk appetite, a lasting rise in net loan to value above 55%, reduced debt-servicing capabilities, or a higher proportion of non-community service tenants.
| Rating list | To | From |
|---|---|---|
| Long-term issuer credit rating: | BBB+ | BBB+ |
| Outlook: | Stable | Stable |
| Short-term issuer credit rating: | N-1+ | N-1+ |
| Senior unsecured issue rating: | BBB+ | BBB+ |
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.