AMP Capital Shopping Centre Fund

The stable rating outlook on ASCF reflects our view that the fund's solid asset quality and sound operating strategies will continue to support the ratings. At the upper-end of the fund's target gearing range (debt to total assets) of 15%-to-25%, we expect the fund's ratio of funds from operations (FFO) to debt to be about 15%. Accordingly, we anticipate that ASCF will manage its cash flow adequacy measures well above these levels during periods of reduced development activity. The main downside risk to the ratings would be a significant debt-funded acquisition or aggressive development activities that push ASCF's FFO-to-debt ratio below 15%, without a plan to return the level of borrowings to its target range in a timely manner. We

...High-quality regional assets to remain a credit strength. AMP Capital Shopping Centre Fund's (ASCF) retail assets retain a regional status and remain fairly stable in their respective trade catchment areas. The fund's flagship assets include Westfield Southland, Victoria; Westfield Warringah Mall, New South Wales; Macquarie Centre, New South Wales; and Indooroopilly Shopping Centre, Queensland. In our view, the portfolio's stable occupancy levels (96.8% across all centers as of Dec. 31, 2020) and well-diversified tenancy base support its asset quality and competitiveness. We expect ASCF to remain committed to maintaining its gearing ratio within the target range of 15%-25%. The fund's gearing ratio (total debt drawn divided by gross assets) was 22.1% as of Dec. 31, 2020. Similar to ASCF's peers, management took timely actions during the first half of 2020 to bolster the balance sheet. This included suspension of distributions; additionally the fund cut capital expenditure (capex) to about...

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