Italy-Based Real Estate Investment Company Beni Stabili SpA SIIQ Proposed Senior Unsecured Notes Rated #BBB-#

Stocks and Financial Services Press Releases Thursday September 28, 2017 16:26
LONDON--28 Sep--S&P Global Ratings

LONDON (S&P Global Ratings) Sept. 28, 2017--S&P Global Ratings said today that it assigned its 'BBB-' issue rating to the proposed senior unsecured notes to be issued by Italy-based commercial real estate investment trust Beni Stabili SpA SIIQ. The issue rating is in line with our 'BBB-' long-term corporate credit rating on Beni Stabili as we see limited subordination risk on Beni Stabili's unsecured debt vis-a-vis the secured debt sitting at the company level, and, more importantly, at the societa di investimento a capitale fisso (SICAF) level. We expect Beni Stabili to use the proceeds of the notes to refinance existing unsecured debt maturing in 2019.

Beni Stabili has a good track record of replacing secured debt with unsecured debt and, in our view, clearly intends to continue to act in a similar way. This is reflected in a secured debt-to-total-assets ratio that we expect will remain below 25% on a group share basis. Besides, the SICAF's debt has been structured on a non-recourse basis: Beni Stabili does not guarantee the SICAF debt and the SICAF debt documentation does not provide for a cross-default if Beni Stabili defaulted. In a default scenario at the SICAF level, which we consider highly remote, SICAF lenders would hold no direct claim on Beni Stabili's assets.

Our assessment of Beni Stabili's business risk profile is underpinned by its exposure to the Milan office market and its leading position in Italy. We also take a positive view on the quality of its portfolio, worth around €3.5 billion on a group share basis, and its cautious development strategy.

We also expect that Beni Stabili is likely to maintain a disciplined financial policy, with a publicly stated loan-to-value target ratio below 45% on a group share basis. We project that Beni Stabili's debt-to-debt-plus-equity ratio should improve to around 45% in the next 12-24 months, with EBITDA interest coverage above 2.5x on a group share basis.

For our latest research update on Beni Stabili see "Italy-Based Real Estate Investment Company Beni Stabili SpA SIIQ Assigned 'BBB-' Rating; Outlook Stable ," published on July 18, 2017 on RatingsDirect.

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