AREITs not out of the woods yet
Ratings house Standard & Poor’s (S&P) has warned that Australian real estate investment trusts (AREITs) face the possibility of further rating downgrades, with the sector now faced with the challenge of refinancing a significant amount of debt in coming months.
S&P released a report on the topic, saying that almost 30 per cent of the rated AREIT sector’s debt is scheduled to be refinanced by the end of next year.
According to S&P, that amounts to more than $45 billion of debt to be refinanced in a tight credit market.
“This significant near-term refinancing task comes at a difficult time for the sector, which is already battling a contraction in available funding, as well as the adverse effects of deteriorating economies and lower asset valuations,” a statement from the research house said.
The researcher said while it’s not all bad news for the AREIT sector, with many funds retaining strong ratings, the outcome of the forthcoming rollovers of 2010 debt maturities and property leases will be a key indicator of whether a 1990s-style property meltdown will be avoidable.
The researcher said that at this stage this is a 'worst-case scenario' for the sector, and one which does not represent an immediate danger in 2009.
Recommended for you
Evidentia’s chief investment strategist Nathan Lim has announced his retirement after a 30-year career.
GQG Partners has marked its fifth consecutive month of outflows as its AI concerns lead to fund underperformance but overall funds under management increased to US$166.1 billion.
Apostle Funds Management is actively pursuing further partnerships in Asia and Europe but finding a suitable manager is a “needle in a haystack”.
Managed account provider Trellia Wealth Partners, formed from the merger between Betashares and InvestSense, has appointed its first managing partner.
