NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) issues a new report, “REIT Q4’17 Credit Update - Calm Before the Storm.” The report makes the following key points:
- REIT leverage marked decade and historic lows in Q4’17 with median debt-to-market declining slightly to 31.1% for REIT unsecured note issuers.
- Leverage has since reversed, owing to price declines that rank among the most severe since the Great Recession.
- At their Q1’18 closing price trough, the equity values of REIT unsecured issuers had declined by a median 15.3%, translating into a 10.3% median decline in total market cap and a nearly 5% increase in debt-to-market leverage.
- During Q1’18 REITs traded at one of their largest historic discounts to private market value. Until public and private market valuations re-establish parity, REIT management teams are likely to scale back both growth and equity issuance and shift towards self-funding strategies.
- The REIT bond market appears to have shrugged off share price declines with spreads outperforming other corporate sectors during Q1’18.
To read the full report, please click here.
Related Publications: (available at www.kbra.com)
- REIT Private Placements – Lower Leverage, Better Execution?
- A Deeper Dive on REIT Bond Leverage – AAA in Disguise?
- Global Equity REIT & REOC Rating Methodology
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KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.