Moody's affirmed the ratings of South Africa-based Fortress REIT Ltd., Growthpoint Properties Ltd., Redefine Properties Ltd. and Hyprop Investments Ltd., after it confirmed the sovereign rating of the country at Baa3 stable.
With the exception of Hyprop, whose rating was assigned a negative outlook, the ratings on the companies were confirmed with a stable outlook.
The decision to affirm Fortress' Baa3/Aa1.za long-term issuer ratings came on the back of its niche sector exposure to regional retail centers along key transportation nodes and logistics properties across South Africa, among other factors. The stable outlook indicates the rating agency's opinion that the company will sustain an operating profile that will cause revenues to increase in line with inflation at the least, with EBITDA margins remaining stable.
For Growthpoint, the confirmation of its Baa3/Aaa.za long-term issuer ratings stemmed from its strong market position as the largest primary listed real estate investment trust in South Africa, according to the report. Moody's said that the REIT's outlook is in line with the action taken on the South African government, adding that Growthpoint's credit profile is limited by the sovereign rating owing to its operational concentration in the country.
Redefine and Hyprop were also affirmed at Baa3/Aa1.za, a decision that stemmed from a property portfolio growth, in the case of Redefine, over the prior 18 months in South Africa, Europe and Australia, and from the possession of a high quality and well-positioned South African retail portfolio, when accounting for Hyprop.
The stable outlook on Redefine reflects Moody's expectation that the company will continue to generate steady rental income and maintain an adequate liquidity profile.
The negative outlook on Hyprop is due to its debt-funded acquisitions across Eastern Europe, as well as the increasing property exposure and cash flows from weaker sovereign markets.