Moody’s Investors Service has downgraded Hammerson’s issuer rating and senior unsecured ratings to Baa2, from Baa1.
Moody’s made the decision based on expectations that the REIT’s leverage will be higher than expected, after its planned £400m sale of seven retail parks collapsed last week.
The rating agency highlighted “heightened concern” that the coronavirus pandemic will make it more challenging for the company to achieve its deleveraging goals.
It said it saw “little chance of substantial property sales for the duration of the pandemic”.
The outlook remains under review. During the rating review process, which began on 8 April, Moody’s is assessing the impact of the pandemic.
It will focus on the extent of business interruptions on Hammerson’s operations; a review of the expected impact on the retail industry in general, and retailers in Hammerson’s centres compared to peers; and the company’s actions to protect its balance sheet, against a backdrop of falling rents and property values.
Moody’s added that negative rating pressure could develop if the business disruptions stretch beyond the end of June.
However, the rating agency noted that the landlord has enough liquidity to withstand a “prolonged period of rental income deterioration”. The company had £1.2bn of undrawn committed facilities and cash on 25 March.
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