Residential landlord Grainger’s long-term issuer default rating has been affirmed at ‘BB’ with a stable outlook by Fitch Ratings. The rating of its senior secured notes is affirmed at ‘BB+’.
The ratings reflect Grainger’s focus on the London residential market, a defensive £1.9bn property portfolio concentrated on regulated tenancies, and the company’s recent deleveraging driven by divestments.
Unlike investment-grade REIT peers Grainger’s business model relies more on proceeds from portfolio sales than on recurring rental income, although we recognise management’s plans to increase rental income significantly by 2020.
Fitch expects recent and ongoing improvements to the company’s business risk profile to be positive for the ratings, driven by the simplification of the corporate structure and the focus on growing its portfolio of UK market-rented property assets.
Grainger’s financial metrics, which have improved by recent asset sales, are robust for the ratings, but Fitch expects leverage to increase as proceeds are redeployed into market-rented assets.
(LON:GRI) Grainger PLC share price was -0.75p at 216.15p
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