Nordic Credit Rating said today that it had affirmed its 'BBB-' long-term issuer rating on Sweden-based commercial property manager Platzer Fastigheter Holding AB (publ). The outlook is stable. At the same time, the 'N4' short-term issuer rating was also affirmed. The senior unsecured issue rating was affirmed at 'BB+', in accordance with NCR's revised corporate rating methodology. The ratings are no longer under criteria review.
Rating rationale
The long-term rating reflects the company's strong market position in Greater Gothenburg, one of Sweden's fastest-growing regions. It also reflects Platzer's clear focus on offices and logistics/industrial property, mainly in prime locations, as well as its relatively modest financial gearing.
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. The downward revision of our financial ratio assessment reflects the increased impact of higher interest rates and our expectations of lower property values on the company's financial metrics, despite our expectations of improved EBITDA.
Contrarily, we have raised our assessment of Platzer's market position, size and diversification to better reflect its strong market position in Greater Gothenburg. Platzer is one of the largest owners of commercial office property in Gothenburg and one of the larger players in industrial and logistics property.
Stable outlook
The stable outlook reflects our expectation that Platzer's financial metrics will weaken temporarily in 2023 but improve over our forecast period through 2025, primarily due to earnings from completed projects. We believe Platzer will continue focusing on commercial property in the Greater Gothenburg area and grow through project development. We expect that Platzer will reduce its capital spending in the short term and be more selective about new projects. We also believe the company will complete its current development projects without substantial cost overruns or delays.
We could raise the rating to reflect improved credit metrics (net loan to value (LTV) below 40% over a protracted period), an improved debt maturity profile with reduced maturity concentrations, or to reflect efforts to deleverage and significantly reduce project risk exposure. We could lower the rating to reflect a worsening of credit metrics (net LTV above 50% or EBITDA/net interest below 2.5x) over a protracted period, deteriorating market fundamentals that adversely affect occupancy and/or profitability, or to reflect increased exposure to and risk taking in development projects.
| Rating list | To | From |
|---|---|---|
| Long-term issuer credit rating: | BBB- | BBB- |
| Outlook: | Stable | Stable |
| 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
The methodology documents used for this rating are NCR's Corporate Rating Methodology published on 8 May 2023, NCR's Rating Principles published on 24 May 2022 and NCR's Group and Government Support Rating Methodology published on 18 Feb. 2022. For the full regulatory disclaimer please see the rating report.