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Moody's puts Hammerson ratings on review for downgrade

Moody's placed Hammerson PLC's Baa1 issuer and senior unsecured ratings on review for downgrade.

The ratings outlook was revised to rating under review from negative.

The U.K.-based diversified real estate investment trust has been affected by the business interruption caused by the coronavirus pandemic with the closing of the majority of its properties and stores.

Hammerson's good liquidity will be boosted from the sale of a seven-property retail portfolio in the U.K. for sale proceeds of £395 million. However, the company could face difficulties in sustaining its target leverage ratio below 40% loan-to-value as property values continue to fall.

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During the rating review process, Moody's will review the effect of business interruptions on the company's operations and the expected impact on the retail industry, as well as the company's actions to preserve its balance sheet.

The factors that could lead to a downgrade include weakened operating performance, Moody's-adjusted gross debt/total assets above 40% based on the proportional consolidation of the company's partnerships and on the equity consolidation of the stake in premium outlets, and Moody's-adjusted fixed-charge coverage below 3.0x.