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S&P affirms Hospitality Properties Trust ratings, changes outlook

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S&P affirms Hospitality Properties Trust ratings, changes outlook

S&P Global Ratings affirmed its BBB- ratings on Hospitality Properties Trust and changed the ratings outlook to negative from stable.

The affirmation pertains to the company's issuer credit rating and to the issue-level rating on its senior unsecured notes.

The action follows a recent agreement by the hotel and travel center real estate investment trust to acquire a net-lease portfolio from net-lease retail-focused Spirit MTA REIT for $2.4 billion in cash.

The rating agency said the outlook revision factors in its opinion that, while the transaction is "modestly favorable" from a business risk perspective, Hospitality Properties' credit protection measures are likely to weaken because of the proposed deal.

Ratings also believes there is some execution risk associated with about $800 million of asset dispositions that the REIT expects for the rest of 2019.

The rating agency projects that the company's adjusted debt to EBITDA will rise to the mid-6x area at the end of 2019 from 5.3x as of March 31, before dropping to the low-6x area in 2020.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.