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S&P affirms NEPI Rockcastle's ratings, changes outlook to negative

S&P Global Ratings affirms NEPI Rockcastle PLC's BBB long-term issuer credit rating and senior unsecured debt ratings, while revising the company's outlook to negative from stable.

The rating agency said it expects the nonessential store closures as part of government measures to contain the coronavirus outbreak severely affect the bulk of the U.K.-based real estate group's shopping centers and could lead to rent negotiations or rent-free periods for its affected tenants if the situation continues, Ratings said.

Ratings revised its base-case scenarios for retail property owners, expecting a 15% to 20% drop in net rental income for 2020 on a like-for-like basis, with only a slow recovery in 2021. It expects the company's adjusted debt to debt plus equity to deteriorate to 34% to 35% at 2020-end and its adjusted debt-to-EBITDA ratio to peak at 6.0x-6.5x in 2020.

The negative outlook reflects Ratings' view that the pandemic could present a more adverse impact on the company's operating performance than expected, which could result in a more material deterioration of credit ratios over the next 24 months. It also reflects the company's large operations in Romania, where the sovereign outlook stays negative.

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This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.