S&P Global Ratings assigned a B+ issuer credit rating to Forest City Realty Trust Inc., with a stable outlook, following the company's proposed approximately $11.4 billion acquisition by Brookfield Asset Management Inc.
S&P attributed the rating to the expected weak credit metrics of the diversified real estate investment trust over the next 12 months, with debt to EBITDA expected around 14x. However, this is offset by the company's diversified portfolio of assets in hard-to-enter markets and the expectation of better operating performance thanks to Brookfield's experience and expertise.
Moody's assigned a B1 corporate family rating to Forest City Enterprises LP, with a stable outlook, attributing the rating to the company's well-diversified portfolio, with high-quality mixed-use projects in urban locations, and Brookfield's support post-merger.
The rating agency expects Forest City's net debt-to-EBITDA ratio to reach 14.6x pro forma for the transaction.
The stable outlook reflects S&P's and Moody's respective expectations that Forest City will improve its operating performance and see stronger cash flow under Brookfield, along with the expectation that the company will use proceeds from asset sales and notes to reduce its loan debt and leverage.
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. The original S&P Global Ratings documents referred to in this news brief can be found here.