Credit ratings firms Moody’s, and Standard and Poor’s, hold a positive outlook on the recently merged retail property group, Vicinity Centres.
Both firms issued investment-grade credit issuer ratings in the last two weeks with Moody’s providing an A2 rating, while S&P affirmed its A- rating, describing the group as “stable”.
Moody’s vice president senior analyst, Maurice O’Connell, said the firm expected Vicinity Centres to maintain its conservative financial profile, with a net debt to tangible assets of 25 to 35 per cent.
“The A2 issuers rating reflects Vicinity’s strong market position in the Australian retail property sector, following its creation with the merger of Novion Property Group and Federation Centres in June 2015,” he said.
“At the same time, the rating recognises the real estate investment trust’s stable and predictable level of operating income, as well as its extensive and diversified portfolio of predominantly regional and sub-regional retail shopping centres in Australia.”
Following the announcement of its rating of Vicinity, Moody’s noted the strong level of demand for the group’s assets was “illustrated by the portfolio’s exceptionally high and consistent occupancy rates of around 99 per cent each year for the past decade”.
“Furthermore, the fixed rent structure of the portfolio’s leases, typically based on fixed annual rent increases of around five per cent should underpin continued growth in net operating income,” Moody’s reported.
