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S&P Sends CRE Firm Branicks To CCC+[N] On Liquidity And Covenants

REAL ESTATE
  • 2023 property sales grossed €285mnm below Branicks’ €300mn-€600mn target, leading to currently insufficient liquidity for their €569mn in 2024 maturities
  • The company announced negotiations with debtholders on Monday though there is no visibility on the potential outcome.
  • Successful renegotiation will likely come with higher interest costs – covenants require an ICR > 1.8x and S&P see around 10% headroom as of year-end though they don’t anticipate a breach as their base scenario.
  • The S&P-adjusted ICR is seen at 1.6x this year from 1.9x at 9M23 though calculation here differs from covenants.
  • The €400mn Branicks 26s have sold off €4.16 WoW though are still +€5.21 YTD at €37.92.

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