S&P Global Ratings affirmed its issuer credit and issue-level ratings on VEREIT Inc. at BBB-, with a stable outlook.
The single-tenant real estate investment trust recently agreed to settle pending litigation for at least $800 million. The litigation includes a class-action lawsuit and opt-out actions related to improper accounting under its former management team.
The stable outlook reflects the rating agency's expectation that the REIT will sustain a solid operating performance, thanks to its well-occupied triple-net leased asset portfolio.
Ratings also anticipates that VEREIT will fund its settlement costs with sale proceeds, free cash flow, equity and some debt that would result in S&P-adjusted debt-to-EBITDA dropping to mid-6x to low-7x by year-end 2020. However, some short-term volatility is expected in the company's credit protection measures in connection with the settlement costs over the next year, the rating agency noted.
"While we expect some near-term impact on credit protection measures, we believe VEREIT is fairly well-positioned from a liquidity perspective to tackle the recently announced, material litigation settlement amounts," Ratings said.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings.
