{"id":51793,"date":"2026-04-14T20:06:58","date_gmt":"2026-04-15T00:06:58","guid":{"rendered":"https:\/\/prefblog.com\/?p=51793"},"modified":"2026-04-14T20:06:58","modified_gmt":"2026-04-15T00:06:58","slug":"dbrs-confirms-bpo-at-pfd-3low","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=51793","title":{"rendered":"DBRS Confirms BPO at Pfd-3(low)"},"content":{"rendered":"

I wouldn’t normally post about a credit rating confirmation, but for BPO I’ll make an exception!
\nDBRS has announced<\/a> that it:<\/p>\n

confirmed its Issuer Rating and Senior Unsecured Debt credit rating on Brookfield Property Partners L.P. (BPP) at BBB (low). Morningstar DBRS also confirmed its credit ratings on Brookfield Property Finance ULC’s Senior Unsecured Notes and Brookfield Office Properties Inc.’s Senior Unsecured Notes at BBB (low), as well as Brookfield Office Properties Inc.’s Subordinated Notes at BB and Cumulative Redeemable Preferred Shares, Class AAA at Pfd-3 (low). All trends are Stable. The credit ratings are based on the credit risk profile of the consolidated entity, including BPP and its subsidiaries (collectively, BPY).<\/p>\n

KEY CREDIT RATING CONSIDERATIONS
\nThese credit rating actions consider the progress BPY continues to make in executing its strategy of reducing its balance sheet exposure to real estate, along with an anticipated commensurate reduction in financial leverage, while maintaining exposure to very high-quality core office and retail assets. BPY’s exposure to its LP Investments segment is declining as the opportunistic funds mature and execute realizations, thereby providing a source of funds. BPY’s operating environment has supported robust transaction activity, including office leasing, and new office leases are creating a near-term drag on net operating income (NOI) growth until cash rents commence.<\/p>\n

The Stable trends consider Morningstar DBRS’ expectations for (1) improved same-property NOI growth rates in the near to medium term as new office leases yield cash rents; (2) continued support from BPY’s parent, Brookfield Corporation (BN; rated “A,” Stable by Morningstar DBRS), in the near term, by way of equity funding for upcoming debt maturities; and (3) BPY to continue executing its strategy of recycling capital into trophy office and retail assets while reducing leverage over time, resulting in an improved financial risk assessment (FRA) profile, as described below.<\/p>\n

Morningstar DBRS applied a positive three-notch adjustment to BPY’s FRA in consideration of its enhanced financial flexibility resulting from (1) a global portfolio consisting of a high proportion of core trophy office and retail assets, (2) a relatively strong liquidity position (including consideration for explicit parental support) relative to a modest amount of Senior Unsecured Debt outstanding, and (3) a predominately nonrecourse secured debt stack with significant equity cushion providing coverage of its Senior Unsecured Debt. This FRA adjustment is newly applied following the publication of Morningstar DBRS’ updated “Global Methodology for Rating Entities in the Real Estate Industry,” whereby some adjustments are now considered as part of the Comprehensive FRA (CFRA). This adjustment also serves to balance the constraint on the Intrinsic Assessment Range when the Comprehensive Business Risk Assessment is much stronger than the CFRA, as in the case for BPY.<\/p>\n

CREDIT RATING DRIVERS
\nMorningstar DBRS would consider a negative credit rating action if Morningstar DBRS were to change its views on the level and strength of implicit support provided by BN, should BPY’s total debt-to-EBITDA deteriorate to more than 16.0 times (x), or if BPY’s EBITDA interest coverage were to deteriorate from current levels (0.92x for the last 12 months (LTM) ended December 31, 2025), on a sustained basis, all else equal. On the other hand, Morningstar DBRS would consider a positive credit rating action should Morningstar DBRS’ outlook for BPY’s total debt-to-EBITDA improve to 13.0x or better, all else equal.<\/p>\n

FINANCIAL OUTLOOK
\nMorningstar DBRS maintains its FRA of BPY. In the near to medium term, Morningstar DBRS expects that BPY will continue to demonstrate an improving trend in its total debt-to-EBITDA metric toward the 15x range (from 15.8x at the LTM ended December 31, 2025), and that BPY’s EBITDA interest coverage metric will continue an improving trend above the 1.00x range. These improving metrics will be largely driven by continued capital recycling activity, associated debt reduction, support from BN in the interim, positive same-property NOI growth, and the benefit of lower interest rates.<\/p>\n

CREDIT RATING RATIONALE
\nThe credit ratings continue to be supported by (1) Morningstar DBRS’ view of implicit support from BN, as detailed above; (2) BPY’s market position as a pre-eminent global real estate company; (3) BPY’s high-quality assets, particularly its Office and Retail segments, with long-term leases to large, recognizable investment-grade-rated tenants; and (4) superior diversification, in particular by property, tenant, and geography. The credit ratings continue to be constrained by BPY’s weak FRA as reflected by both its highly leveraged balance sheet; a riskier retail leasing profile in terms of lease maturities and counterparty risk relative to BPY’s Office segment; and a higher-risk opportunistic LP Investments segment composed primarily of office, mixed-use, logistics, and multifamily assets, as well as alternatives.<\/p>\n

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
\nThere were no Environmental\/Social\/Governance factors that had a significant or relevant effect on the credit analysis.<\/p><\/blockquote>\n

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.T, BPO.PR.T, BPO.PR.W, BPO.PR.X and BPO.PR.Y.<\/p>\n","protected":false},"excerpt":{"rendered":"

I wouldn’t normally post about a credit rating confirmation, but for BPO I’ll make an exception! DBRS has announced that it: confirmed its Issuer Rating and Senior Unsecured Debt credit rating on Brookfield Property Partners …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[],"class_list":["post-51793","post","type-post","status-publish","format-standard","hentry","category-issue-comments"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/51793","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=51793"}],"version-history":[{"count":1,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/51793\/revisions"}],"predecessor-version":[{"id":51794,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/51793\/revisions\/51794"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=51793"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=51793"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=51793"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}