Research Update: Australian Prime Property Fund Retail Ratings Lowered To 'A-' On Asset Selldown; Outlook Negative

Australian Prime Property Fund Retail (APPF Retail)'s proposed divestment of a 50% interest in Westfield Carindale, coupled with the sale of Westfield Marion in December 2019, will meaningfully reduce the fund's scale and asset diversity. The fund's total assets will reduce by about 25%. On Feb. 21, 2020, S&P Global Ratings lowered the long-term issuer credit rating on APPF Retail to 'A-' from 'A+' and the short-term issuer credit rating to 'A-2' from 'A-1'. We also lowered the issue credit rating on the fund's debt to 'A-' from 'A+'. The negative outlook reflects our view that APPF Retail's financial headroom at the 'A-' rating remains under pressure, given a potential equity redemption request that may require material additional debt funding.

...- Australian Prime Property Fund Retail (APPF Retail)'s proposed divestment of a 50% interest in Westfield Carindale, coupled with the sale of Westfield Marion in December 2019, will meaningfully reduce the fund's scale and asset diversity. The fund's total assets will reduce by about 25%. - On Feb. 21, 2020, S&P Global Ratings lowered the long-term issuer credit rating on APPF Retail to 'A-' from 'A+' and the short-term issuer credit rating to 'A-2' from 'A-1'. We also lowered the issue credit rating on the fund's debt to 'A-' from 'A+'. - The negative outlook reflects our view that APPF Retail's financial headroom at the 'A-' rating remains under pressure, given a potential equity redemption request that may require material additional debt funding. - APPFR is likely to be required to fund equity redemption requests of about A$1.5 billion by Nov. 27, 2020, triggered by a seven-yearly redemption right that unitholders exercised in November 2018....

Research Update