S&P Global Ratings has revised its rating outlook on Starhill Global Reit to"negative" from"stable", on the expectation that the trust's financial leverage will be stretched over the next 18 to 24 months.
"We expect SGReit's leverage ratio to deteriorate to below our downgrade trigger because of an asset-enhancement initiative concerning its Starhill Gallery in Malaysia," S&P Global said in a press statement on Tuesday."We anticipate that SGReit's ratio of funds from operations to debt will fall to the low end of the 8 per cent range over the next few years. This leverage measure is weaker than our previous estimate of 9.2 per cent to 9.6 per cent for fiscal 2020.
Nonetheless, the credits rating agency is affirming SGReit's issuer credit rating, and the rating on its guaranteed senior unsecured notes at 'BBB+'. This comes as S&P Global anticipates that secured occupancy, and higher rents on lease renewal following the AEI's completion in 2021 could lead to a recovery in leverage ratios by 2023.
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