Moody’s cuts Washington Prime, view to negative

Moody’s Investors Service said it downgraded all of Washington Prime Group Inc.’s ratings, including the ratings of its operating subsidiary, Washington Prime Group, LP’s senior unsecured debt to B1 from Ba2. The speculative grade liquidity rating remains at SGL-3. The outlook was revised to negative from stable.

The downgrade reflects Washington Prime’s continued weak operating performance from its mall portfolio, which has inhibited the REIT’s ability to maintain its financial leverage targets. Washington Prime’s liquidity profile also remains weak and without outside capital raises it will be highly reliant on its unsecured credit line over the upcoming year. Moody’s said it will be closely monitoring management’s ability to alleviate liquidity pressures.

Moody’s noted Washington Prime has only a modest cushion on the leverage covenant in its credit line and bonds, as income declines have reduced capitalized value of its assets. The REIT expects operating income growth of at least 2% in 2020, but unanticipated tenant bankruptcies and store closures remain risks and could make continued compliance challenging.

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