Nordic Credit Rating said today that it had affirmed its 'BBB-' long-term issuer rating on Sweden-based property manager Platzer Fastigheter Holding AB. The outlook is negative. The 'N4' short-term issuer rating was also affirmed, as was the 'BB+' senior unsecured issue rating.
Rating rationale
The long-term issuer rating reflects Platzer's strong market position in Greater Gothenburg, one of Sweden's fastest-growing regions. It also reflects the company's clear focus on offices and logistics/industrial property, mainly in prime locations, as well as its relatively modest financial gearing. We take a positive view of Platzer's green credentials; the company's ordinary shares have been certified as green, 75% of its properties have obtained environmental certification, 66% of its loans qualify as green loans, and 64% of its lettable area is leased under green leases.
These strengths are offset by Platzer's relatively high tenant concentrations and ambitious project development pipeline, which has some speculative elements. We view the company's relatively weak cash flow and short debt maturity profile, with significant maturities concentrated in single years, as negative factors in our assessment of financial risk.
Negative outlook
The negative outlook reflects our expectation that Platzer's financial metrics will remain under pressure due to elevated financing costs and the planned SEK 1.8bn acquisition of an extensive property project in Mölndal municipality. In our base-case forecast, we have included projected divestments of SEK 600m annually through 2026, as we believe that Platzer has a long-term commitment to its financial policy levels (net loan-to-value [LTV] not exceeding 50%). However, we are uncertain about the timing and value of any transactions and see a distinct possibility that the company's financial metrics could weaken by more than we currently project due to lack of mitigating action. However, we believe that Platzer will continue focusing on commercial property in the Greater Gothenburg area and remain selective about new projects.
We could lower the rating to reflect EBITDA/net interest below 2.5x and net LTV above 50% over a protracted period, deteriorating market fundamentals that adversely affect occupancy and/or profitability, or increased exposure to and risk-taking in development projects.
We could revise the outlook to stable to reflect stable credit metrics, with EBITDA/net interest above 2.5x and net LTV below 50% over a protracted period, or to reflect efforts and a commitment to deleverage.
| Rating list | To | From |
|---|---|---|
| Long-term issuer credit rating: | BBB- | BBB- |
| Outlook: | Negative | Negative |
| Short-term issuer credit rating: | N4 | N4 |
| Senior unsecured issue rating: | BB+ | BB+ |
Contacts:
Yun Zhou, analyst, +46732324378, yun.zhou@nordiccreditrating.com
Ylva Forsberg, analyst, +46768806742, ylva.forsberg@nordiccreditrating.com
Elisabeth Adebäck, analyst, +46700442775, elisabeth.adeback@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.