US buyout shops have suffered downgrades in some of their real estate lending vehicles from Moody’s Investors Service, which has warned that stress in the commercial real estate market is “quickly growing”.
The debt ratings agency has flagged the risks facing US non-bank commercial real estate lenders, which are facing particular pressure in office and hospitality properties, amid rising unemployment, high interest rates and a wider economic slowdown.
Moody’s Investors Service said that its decision earlier this month to downgrade Blackstone Mortgage Trust’s corporate family rating had been driven by the company’s office and hospitality concentration, which it said was the highest among its commercial real estate lender peers, as well as a sustained decline in the company’s capitalisation.
It added: “The downgrades of the senior secured debt ratings of both Apollo Commercial Real Estate Finance, Inc. (ARI) and KKR Real Estate Finance Trust Inc. (KREF) to Ba3 from Ba2 were driven by a decline in the proportion of unsecured debt to secured debt as the two companies’ capital structures have evolved, and our view that their amounts of unsecured debt no longer provides as much protection to senior secured creditors.”
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Source: www.penews.com
ENB
Sandstone Group
