Nordic Credit Rating (NCR) 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. The 'BB+' senior unsecured issue rating was also affirmed. At the same time, NCR assigned an 'N4' short-term rating, in accordance with its revised short-term rating scale. The ratings are no longer under criteria review.
Rating rationale
The long-term rating reflects Platzer's strong market position in Greater Gothenburg, one of Sweden's fastest growing regions. It further reflects the company clear focus on offices and logistics/industrial properties, primarily in prime locations, as well as its relatively modest financial gearing. We take a positive view of Platzer's green credentials; the company's common stock has been certified as green, 91% of its properties have obtained environmental certification, 68% of the company's loans qualify as green loans, and 63% of rental value comes from green rental agreements.
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 (excluding major divestments) and short debt maturity profile with significant maturities concentrated in single years, as negative factors in our assessment of financial risk.
The short-term rating is the lower of two alternatives possible when the long-term issuer rating is 'BBB-', reflecting our assessment that Platzer's liquidity is weak for the rating level.
Stable outlook
The stable outlook reflects our expectation that Platzer will maintain net loan to value (LTV) below 50% and that interest coverage will decrease due to higher interest rates. We expect Platzer to continue focusing on commercial properties in the Greater Gothenburg area, while seeking growth primarily through project development. We also expect the company to complete its current development projects without substantial cost overruns or delays. We could raise the rating to reflect improved credit metrics (net LTV below 40% over a protracted period), reduced tenant concentrations combined with reduced exposure to and risk taking in development projects, or an improved debt maturity profile with reduced maturity concentrations. We could lower the rating to reflect worsened 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 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 | N-1 |
| Senior unsecured issue rating: | BB+ | BB+ |
Contacts:
Marcus Gustavsson, analyst, +46700442775, marcus.gustavsson@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 18 Feb. 2022, NCR's Group and Government Support Rating Methodology published on 18 Feb. 2022 and NCR's Rating Principles published on 24 May 2022. For the full regulatory disclaimer please see the rating report.