Moody's downgrades Suntec REIT

Moody's Investors Service said it downgraded Suntec Real Estate Investment Trust's issuer rating to Baa3 from Baa2.

The agency also said it downgraded backed senior unsecured rating on the euro medium-term note program established by Suntec REIT MTN Pte. Ltd., a wholly owned subsidiary of Suntec REIT, to provisional Baa3 from provisional Baa2, as well as backed senior unsecured ratings on the notes to Baa3 from Baa2.

The outlook is stable.

The downgrades reflect a view that Suntec REIT's weakened financial profile will not materially improve over the next 18 to 24 months, Moody's said.

The agency noted that Suntec REIT's leverage profile has weakened following the debt-funded acquisition of an effective 25% stake in Southgate Complex in the Australian city of Melbourne for A$154.9 million in November 2016.

The company's adjusted net debt-to-EBITDA for the 12 months that ended March 31 was 11.9x, Moody's said.

And leverage is expected to remain elevated at 11x to 12x over the next 18 to 24 months, the agency added.

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