CBRE Pan European Core Fund

Overview Key strengths Key risks Growing and diversified €7.0 billion property portfolio as of Sept. 30, 2022, constituting mainly logistic premises (35.1% of the portfolio's gross asset value [GAV]), offices (24.9%), retail (17.4%) and residential assets (14.2%). Increasingly challenging economy and less-supportive financial conditions to weigh on asset valuations and refinancing costs. High-quality portfolio in the main European city centers for its retail, office, and residential assets (which account for close to 57% of the portfolio's GAV as of Sept. 30). Deteriorating economic prospects and rising inflation to diminish consumer purchasing power and weigh on consumption and retail sales, limiting ability to pass on higher rents in its retail portfolio (17.4% of GAV as of Sept. 30). Growing exposure to

...S&P Global Ratings expects CBRE Pan European Core Fund's (CBRE PEC Fund's) comfortable credit metric headroom to sustain further downward revisions in property valuations. Although we expect downward pressure in asset values in the next year, the headroom should enable the fund to absorb further erosion in asset values of around 10% in our forecasts. We see the company's moderate debt level (S&P Global Ratings-adjusted debt to debt plus equity of 18.5% as of June 30, 2022), appropriate interest rate hedging policy (about 80% of fixed debt with the only nonfixed-rate debt being the 300 million available revolving credit facility and the bridge financing facility), and well-balanced maturity schedule (no major maturities upcoming in the next 24 months) shoring up its financial standing despite rising market instability. High indexation and stable occupancy rates should support CBRE PEC Fund's rental growth prospects, in our view. High pass-on rents across the issuer's diversified portfolio...

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