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EMEA Real Estate Companies - News - FitchRatings

Updated: Nov 3, 2023

EMEA Real Estate Companies Respond to Refinancing Risk

24 OCTOBER 2023

Full announcement including disclaimers and offer restrictions available via FitchRatings

"Fitch Ratings-London-24 October 2023: Rated EMEA real estate companies with near-term debt maturities have responded to refinancing risk by issuing secured and unsecured debt, thus extending debt profiles, selling properties to repay debt or raising equity, Fitch Ratings says in a new report. Most companies in our portfolio still benefit from a low blended average cost of debt on existing mostly long-dated fixed-rate debt including interest rate hedging.

Fitch has taken rating actions in cases where refinancing may prove difficult due to pricing or market access, including on SBB, IGD, Canary Wharf (CWGIH), Heimstaden Bostad and Heimstaden AB, sometimes 12 to 18 months ahead of debt maturity walls.

The average cost of debt is increasing and interest coverage ratios are tightening as debt maturities are refinanced with higher interest rate debt. We believe that in 2023 and 2024 smaller sound companies with short-term refinancing needs will make tender offers or non-distressed debt exchange offers to existing bondholders. By doing so, companies lower execution risk by managing existing investors into longer-term bonds, with increased coupons, perhaps mixed with partial debt repayments to entice investors. A three- to four-year elongation fits with consensus views that inflation prospects and interest rates may have settled by then."



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