Moody's trims Brandywine

Moody's Ratings said it downgraded Brandywine Operating Partnership, LP's corporate family rating and backed senior unsecured ratings to Ba2 from Ba1, citing debt refinancings that have weakened its fixed charge coverage and the difficult operating environment for office landlords hampering earnings growth.

The agency said it also revised the outlook to stable from negative.

“The high coupon for the debt refinanced in the last two years will weaken the REIT's fixed charge coverage to about 1.7x-1.8x in 2024 from almost 2.2x in 2023 and 3x in 2022. Brandywine's net debt to EBITDA will also deteriorate to about 9x by the end of 2024 due to a modest increase in debt outstanding,” Moody’s said in a press release.

The stable outlook relies “on a high degree of confidence that operating metrics and cashflows will be maintained at current levels given the REIT's modest lease expirations in 2024 and 2025. Another important consideration is that Brandywine's laddered debt maturity schedule – after the recent refinancing it only has $70 million of debt maturing through YE 2025 – alleviates concerns about its liquidity and refinancing costs,” the agency explained.

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