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On Monday, Moody’s Ratings announced an upgrade to Fastpartner AB’s corporate family rating (CFR) to Ba3 from B1, citing a positive outlook for the Swedish real estate company. The upgrade reflects the company’s strong operating performance, including rising rental income and improved interest coverage ratios.
Fastpartner, which specializes in office rental properties, has demonstrated resilience with increasing rental income despite lower indexation rates. The company is also expected to benefit from recent interest rate cuts, with its EBITDA interest coverage projected to rise from 1.8x at the end of 2024 to between 2.4x and 2.5x within the next 12 to 18 months. Moreover, Fastpartner’s proactive approach to hedging and potential financial support from Compactor Fastigheter AB have been recognized as positive factors.
Moody’s also acknowledges the strategic focus of Fastpartner’s property portfolio, which is concentrated on office buildings in prime locations within the Greater Stockholm area, including well-positioned logistics properties. Despite a relatively high vacancy rate of 7.6% at the end of 2024, ongoing property refurbishments are expected to enhance quality and reduce vacancies. With nearly 90% of rents CPI-linked, the company is anticipated to see further rental income growth and a net debt/EBITDA ratio of around 10x over the next 12 to 18 months.
The positive outlook is based on the expectation of continued improvement in Fastpartner’s credit metrics, with Moody’s adjusted EBITDA interest coverage forecasted to improve to between 2.4x and 2.5x. The company is also anticipated to proactively manage its debt maturities.
Factors that could lead to further upgrades include achieving and maintaining leverage towards 50%, a debt/EBITDA ratio below 11x, and a Moody’s-adjusted fixed-charge coverage ratio exceeding 2.0x. Conversely, factors that could result in a downgrade include leverage above 55%, a net debt/EBITDA above 12x, a fixed-charge coverage ratio below 1.7x, weakened liquidity, or deteriorating market fundamentals.
Fastpartner’s liquidity is considered adequate, with access to significant liquidity that covers upcoming outflows. The company’s improved corporate governance, evidenced by increased hedging and renegotiated covenant levels, has also contributed to the positive rating action.
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