Moody’s cuts Store Capital

Moody’s Investors Service said it downgraded Store Capital Corp.'s issuer rating to Baa3 from Baa2 and the ratings on the unsecured senior notes to Baa3 from Baa2. The outlook was also changed to negative from rating under review. These actions conclude the review for downgrade started on Sept. 21.

GIC and Oak Street Real Estate Capital, LLC, a division of Blue Owl Capital Inc. reported the completion of the privatization of Store in an all-cash transaction valued at about $14.8 billion, comprising $8.2 billion of new equity capital, $4 billion of assumed debt along with $2.6 billion of incremental and reconstituted debt financing.

“Consequently, Store's leverage and coverage metrics will weaken beyond the parameters of a Baa2 credit profile. The higher leverage also raises some concerns about financial policy and governance. Further, the unencumbered asset base will decline, partially limiting the REIT's financial flexibility,” Moody’s said in a statement.

The outlook considers Store's potential growth plans and liability management during a period of weakening business conditions amid still-rising interest rates, continuing inflation and geopolitical challenges, the agency said.

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