Moody’s views Grand City negatively

Moody’s Investors Service said it revised its outlook for Grand City Properties SA to negative from stable and affirmed its Baa1 ratings.

"The credit quality of the German multifamily residential sector is under pressure and at risk of a further deterioration in the next 12-18 months. This is largely due to the higher interest rates, reduced pricing attractiveness of the capital markets compared to bank financing, downward pressure on property values, and the current weak but slowly improving investment markets that make it challenging to quickly reduce leverage solely through disposals.

“However, the credit quality of the sector continues to be buoyed by favorable long-term fundamentals, which support high occupancy rates and rental growth. The decrease in construction activity is likely to exacerbate the already limited supply of affordable housing. Simultaneously, demographic shifts and higher mortgage rates are expected to sustain high rental demand," Moody’s said in a press release.

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