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DBRS has announced:

hanged the trend on Brookfield Property Partners L.P.’s (BPP) Senior Unsecured Debt to Negative from Stable. DBRS Morningstar also confirmed the rating at BBB. Additionally, DBRS Morningstar changed the trends on Brookfield Property Finance ULC’s Senior Unsecured Notes and Brookfield Office Properties Inc.’s Senior Unsecured Notes and Cumulative Redeemable Preferred Shares, Class AAA to Negative from Stable. DBRS Morningstar also confirmed the ratings at BBB, BBB, and Pfd-3, respectively. DBRS Morningstar notes that the ratings are based on the credit risk profile of the consolidated entity, including BPP and its subsidiaries (collectively, BPY or the Partnership).

The Negative trends reflect BPY’s weaker-than-expected key financial risk metrics, particularly total debt-to-EBITDA (14.4 times (x) on a last-12-months (LTM) basis at December 31, 2019), combined with material deterioration in the outlook and heightened uncertainty with respect to the Partnership’s ability to delever the balance sheet by way of its capital recycling initiatives in light of the ongoing Coronavirus Disease (COVID-19) pandemic and consequent economic slowdown.

Near-term challenges for BPY in light of coronavirus include substantial exposure to enclosed shopping centres (i.e., discretionary retail exposure and prospects for accelerating tenant bankruptcies) through its Core Retail segment (46% net operating income (NOI) contribution LTM), exposure to hotels (6% NOI contribution LTM) through its LP Investments segment, and a highly levered balance sheet that, in DBRS Morningstar’s view, may limit the Partnership’s financial flexibility.
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DBRS Morningstar will likely consider rating downgrades within the next 12 months if deterioration in BPY’s operating environment is worse than anticipated or BPY fails to demonstrate material credit accretive transaction activity such that total debt-to-EBITDA remains above 14.0x on a sustained basis or if DBRS Morningstar changes its views on the level and strength of implicit support provided by BAM.

Affected issues are: BPO.PR.A, BPO.PR.C, BPO.PR.E, BPO.PR.G, BPO.PR.I, BPO.PR.N, BPO.PR.P, BPO.PR.R, BPO.PR.S, BPO.PR.T, BPO.PR.W, BPO.PR.X and BPO.PR.Y. The rating on all these issues remains at Pfd-3.

This entry was posted on Monday, April 6th, 2020 at 10:31 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.