S&P turns Kiwi Property view to negative

S&P said it changed its outlook for Kiwi Property Group Ltd. to negative from stable and affirmed its BBB issuer rating and BBB+ senior secured debt rating.

“We anticipate KPG's credit metrics will deteriorate over the next 12 months. The company's capex requirements and weakened rental profile amid elevated interest rates will worsen its credit metrics. Capital from recent divestments has been largely recycled to KPG's development pipeline without a commensurate reduction in debt. The divestments have reduced the company's portfolio size, which will reduce rental income and earnings,” S&P said in a press release.

The agency estimates KPG’s ratio of adjusted funds from operations to debt will weaken below 8% during fiscal year 2024 (ending March 31, 2024).

However, S&P noted KPG’s progress on its development program while trying to strengthen its balance sheet flexibility amid difficult operating conditions. “We also believe KPG is committed to maintaining a financial profile consistent with the current BBB rating and that it will deploy capital management initiatives to improve credit metrics.”

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