Ratings agency Moody's has placed UK commercial landlord Canary Wharf Group's ratings on review for downgrade due to what it called the worsening outlook for the real estate sector and a more difficult funding environment.
Canary Wharf Group Investment Holdings (CWGIH) currently has a Baa3 long-term issuer rating and Baa3 senior secured notes.
Moody’s said it expects drops in office values that could be as high as 10%-15% in the next 18 months to drive CWGIH's debt to asset ratio well above 50% from its 48.5% level at 30 June 2022.
Furthermore, materially increased funding costs and weaker demand for occupational space as the macroeconomic environment worsens would make it ‘challenging’ for the property group to maintain credit metrics in line with its Baa3 rating level, it added.
Moody's said deleveraging through asset disposals would also be difficult because of weak real estate investment markets and the ‘still wide gap between buyer and seller price expectations’.
CWGIH owns the giant Canary Wharf estate in London, home to some of the world's largest investment banks and financial service providers, including HSBC and JPMorgan.
