No. of Recommendations: 2
Since article is behind a paywall, posting some excerpts below.
S&P had cut Brookfield Property's issuer credit rating to BBB-, just one rung above junk, in July 2021. The ratings company has placed it on credit watch with negative implications, which means that there's a 50% chance the rating could change within 90 days.
'The CreditWatch placement reflects the company's deteriorating interest coverage metrics, continued secular challenges facing the company's office properties, and a capital structure with a material amount of near-term, floating-rate debt,'
'This designation relates to a specific entity and has no impact on either the pricing or ability of Brookfield to access the real estate capital markets,' Kerrie McHugh, a Brookfield spokesperson, said in an email.
Brookfield has defaulted on office-building loans in New York, Los Angeles and Washington, DC, as well as one of the largest malls in San Francisco this year. It has suspended payments on about 3% of its contractual obligations on non-recourse mortgage debt, according to the ratings service. While S&P considers this a portfolio management exercise by the firm, it could view it more negatively if loan defaults become frequent, its note said.
The size of the parent corporation and 'the reluctance of banks to take back any commercial real estate assets secured by loans in the current market' makes it likely that lenders, in many cases, will agree to extend the maturing debt for Brookfield Property Partners, the analysts wrote.
