S&P revises NEPI Rockcastle view to stable

S&P said it revised NEPI Rockcastle plc’s outlook to stable from negative and affirmed the BBB long-term issuer credit rating and senior unsecured debt ratings on the company.

:NEPI continued to face operating pressures in the first six month of 2021, due to closure of nonessential stores and adoption of social-distancing measures. The company reported a decline in net rental operating income of 3% versus first-half 2020 (and -22.5% versus first-half 2019), mainly due to the impact of government-regulated concessions in Poland and Slovakia and the full periodic rental impact from the disposal of its office assets, completed in August 2020.

“That said, we recognize the company's stable and high occupancy levels at 95.6% and slightly increasing footfall (+2.2% versus first-half of 2020, but -34.3% versus first-half 2019). We understand that only 2.1% of leases expire in 2021, whereas 81% are already agreed and 72% are already signed,” S&P said in a press release.

The outlook reflects the forecast that operating performance will continue stabilizing on improving footfall and tenants' sales as economic activity recovers in Central and Eastern Europe (CEE), with a debt-to-debt-plus-equity ratio below 35%, debt to EBITDA at about 6x-6.5x, and EBITDA interest coverage above 4x over the next two years, S&P said.

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