Moody ratings downgrades Canary Wharf Group Investment

Brookfield Asset Management Inc. and Qatar's sovereign wealth fund, Qatar's financial district, has more than 1.4 billion of debt due in 2024 and 2025. Moody s said the company would probably be heavily reliant on asset sales and potentially shareholder support to help it de-leverage and refinance.

The ratings firm has downgraded Canary Wharf Group Investment Holdings plc from Ba 1 previously, according to Tuesday's statement, citing the difficult operating and funding environment for real estate firms that it expects to continue for at least the next year.

The landlord didn't respond to a request for comment. Its 300 m bond is currently being traded at 68.7 pence in the pound.

UK commercial property has experienced a steep uptick in interest rates that have led to a rise in the cost of borrowing and reduced valuations. A pullback by lenders is causing a funding gap for landlords with maturing loans. The combination is making it difficult for some to contemplate asset sales, equity injections, or alternative and expensive sources of debt.

The market has also seen a standstill in investment markets due to the discontinuation of prices that haven't been reflected in the new monetary policy environment. That s creating a narrow tightrope for landlords that must sell assets to reduce debt, with the likelihood that selling some properties at a discount will affect the valuation of their remaining portfolio.

Cautious investor appetite is leading to low transaction volumes and making it difficult to sell assets without substantial discounts, the ratings agency said. The recent banking turbulence has created further downward pressure on values. Canary Wharf Group is reviving a district originally developed for investment banks that wanted large office towers. The company is creating apartments and seeking to lure life science firms as part of a plan to inject fresh life into the neighborhood, which has necessitated numerous major tenants reducing their office footprints or leaving the neighborhood.

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