Nordic Credit Rating said today that it had withdrawn its 'BB' long-term and 'N4' short-term issuer ratings on Sweden-based property manager NP3 Fastigheter AB (publ) at the issuer's request. At the point of the withdrawal, the ratings were affirmed and the outlook was stable.
Rating rationale
The affirmation reflected NP3's leveraged balance sheet, modest size, and focus on properties outside city centre locations. The rating was constrained by below-average liquidity in NP3's main markets and a financial risk appetite that, in our view, was greater than reflected by the company's financial ratios. Specifically, we viewed NP3's rapid growth and single-year debt maturity concentrations as credit weaknesses.
These weaknesses were offset by NP3's highly cash flow generative property portfolio and strong position in its main markets. However, we took a positive view of the company's long lease terms, combined with its highly diverse revenue streams (the 10 largest tenants accounted for only 11% of rental income).
Stable outlook
At the point of withdrawal, the outlook was stable, reflecting our expectation that NP3's net interest coverage would remain well above 2.2x while the company targeted continued growth through acquisitions. We expect the company to maintain its focus on highly cash flow generative commercial properties in northern and central Sweden, which should support its cash flow metrics. We anticipate financial leverage will decline below historical levels and believe that the company will maintain net loan to value at around 56%, despite its growth focus.
| Rating list | Withdrawal | To | From |
|---|---|---|---|
| Long-term issuer credit rating: | NR | BB | BB |
| Outlook: | - | Stable | Stable |
| Short-term issuer credit rating: | NR | N4 | N4 |
Contacts:
Yun Zhou, analyst, +46732324378, yun.zhou@nordiccreditrating.com
Gustav Nilsson, analyst, +46735420446, gustav.nilsson@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.