Moody’s has downgraded Hammerson’s outlook from stable to negative following the EU referendum last week.
The credit ratings agency cited “prolonged uncertainty” in the market and Hammerson’s high leverage in its decision.
It said it did not expect the company to maintain leverage below 40% in the coming year.
Hammerson’s rating could go up again if the vote for Brexit does not “materially” affect the UK property market, although Moody’s added that an upgrade in the short-term was unlikely.
Meanwhile, Taylor Wimpey retained its stable rating, with Moody’s referring to the company’s low leverage, which it expects to peak at 33% in a worst-case scenario over the next three years.
Land Securities’ outlook also stayed stable despite Moody’s negative outlook on the market.
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While demand for the London office sector is at risk in the wake of the referendum, the value of Land Securities’ portfolio would have to fall by 50% for its leverage to grow to over 40%. This would be “highly unlikely” according to Moody’s.
Roberto Pozzi, vice president of Moody’s, said: “We changed the outlook on Hammerson to negative because uncertainty created by the outcome of the referendum could dampen prospects for the UK real estate sector. This could make it tougher for Hammerson to maintain its leverage in line with requirements for its current rating.”
He added: “Land Securities’ low leverage provides it with significant headroom to withstand any potential drop in assets prices.”
Taylor Wimpey could also “withstand the impact of a more challenging operating environment”, Pozzi said.
Earlier this week, Moody’s downgraded the UK government’s bond rating from stable to negative.
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