S&P changes Merlin Properties view to stable

S&P said it revised the outlook for Merlin Properties, Socimi, SA outlook to stable from positive, and affirmed the BBB long-term issuer credit and issue ratings on the company.

The Spanish government ordered the closing of non-essential retail on March 14.

Merlin's Spanish shopping centers (about 24% of total gross rental income) have remained closed, apart from grocery markets and other essential stores (23% of the company's total stores) since then, the agency said.

“We do not know when they will reopen (existing measures are scheduled until April 11, 2020, but we believe the government could extend this). We anticipate a significant effect on Merlin's retail rents, because of potential negotiations with affected tenants, which will see a sharp drop in sales due to the closure,” said S&P in a press release.

The stable outlook reflects S&P’s expectation Merlin's diversified portfolio will generate sustained rental income over the next 12-24 months, mitigating the potential negative effects from its retail assets so that the company will maintain credit metrics and a liquidity profile commensurate with the rating, the agency said.

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