Research Update: GPT Group Outlook Revised To Negative On Ascot Capital Acquisition; 'A' Rating Affirmed

GPT Group (GPT), an Australia-based REIT, has announced a A$682 million acquisition of 23 logistics assets and one office asset from Ascot Capital Ltd. This will increase GPT's asset allocation to the logistics segment. GPT intends to fund the acquisition with debt. As a result, we expect GPT's ratio of S&P Global Ratings adjusted funds from operations (FFO) to debt to weaken over the next 12-24 months. We have revised our outlook on GPT to negative from stable and affirmed the 'A' long-term issuer credit rating and 'A-1' short-term issuer credit rating on the group. At the same time, we affirmed the 'A' issue credit rating on the group's rated debt. The negative outlook reflects our view that the debt-funded

...- GPT Group (GPT), an Australia-based REIT, has announced a A$682 million acquisition of 23 logistics assets and one office asset from Ascot Capital Ltd. This will increase GPT's asset allocation to the logistics segment. - GPT intends to fund the acquisition with debt. As a result, we expect GPT's ratio of S&P Global Ratings adjusted funds from operations (FFO) to debt to weaken over the next 12-24 months. - We have revised our outlook on GPT to negative from stable and affirmed the 'A' long-term issuer credit rating and 'A-1' short-term issuer credit rating on the group. At the same time, we affirmed the 'A' issue credit rating on the group's rated debt. - The negative outlook reflects our view that the debt-funded acquisition will pressure GPT's credit metrics. In particular, the adjusted FFO-to-debt ratio will weaken from our previous expectations and rating headroom will diminish over our forecast period. Sustained pressure on the credit metrics could eventuate if the acquired portfolio...

Research Update