Downgrades of European Real Estate Companies More Likely
The European real estate sector’s business model resilience and companies’ financial policies will be tested over the coming months, Standard & Poor’s Ratings Services says in a new Industry Report Card.
In the context of lower investor confidence and a global credit squeeze, S&P says its analytical focus is more than ever on liquidity. “This is particularly significant when it comes to the real estate sector, which has high capital intensity and generally high leverage.”
Although S&P does not expect cash flow generation from rental activities to be down much in the coming quarters, the shrinking value of assets is another key concern.
In all, over the next few months negative rating actions–including downgrades, outlook revisions and CreditWatch placements–are more likely, mainly driven by the companies’ liquidity positions and financial flexibility.
In a companion report S&P ranks European real estate companies from strongest to weakest with France’s Unibail-Rodamco ( Euronext Paris:UL) at the top and Atrium European Real Estate Ltd. (Austria:ATR), which invests in Eastern Europe, at the bottom.
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