S&P: Kennedy Wilson notes BBB

Standard & Poor’s said it assigned a BBB rating to the proposed senior unsecured notes to be issued by Kennedy Wilson Europe Real Estate plc.

The ratings reflect an expectation that the company’s percentage of net operating income generated by encumbered assets, currently at 78%, will fall to less than 50% over the next six- to 12-months, S&P said.

Therefore, the agency said it is aligning the rating on the notes with the corporate credit rating on Kennedy Wilson.

The reduction in higher-priority secured debt will be accomplished through a combination of this unsecured debt issuance, acquisition of unencumbered assets, disposals of encumbered assets and repayment of secured debt, if required, S&P said.

The ratings reflect the company’s satisfactory business risk profile and intermediate financial risk profile, the agency said.

The ratings are underpinned by the company’s long lease duration of 8.2 years on average, high occupancy ratio of about 96%, good asset and tenant diversity and negligible exposure to speculative development risk, S&P said.

Tempering the business risk assessment is a view of the company’s average asset quality and partial exposure to more economically sensitive secondary markets, the agency said.

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