Ratings agency Moody's Investors Service has placed two key debt ratings for Macquarie MEAG Prime REIT (MMP REIT) under review for possible downgrade.
The ratings in question are MMP REIT's Baa1 corporate family and Baa2 senior unsecured debt ratings. Moody's says the move has been prompted by MMP's announcement on 19 February to undertake a comprehensive strategic review of the REIT.
The review seeks to address the trust's underperforming unit price against the underlying value of its assets, given Macquarie Bank's intentions to dispose off its entire 26 percent stake.
Moody's says the strategic review raises considerable uncertainty around the asset profile and ownership structure of the REIT.
According to Moody's, it has jeopardised MMP's progress to raise medium-term financing to take out short term loans totalling S$235 million that fall due over the next 7 months, of which nearly 80 percent matures in May 2008.
But Moody's believes that MMP should be well placed to arrange for the loans to be extended given the good stable of quality assets held and managed by the REIT, as well as the relative low leverage of the REIT.
However, the trust's ratings will come under further pressure if rollovers on the bridge loans that fall due in end-May are not obtained by mid-March.
Singapore-listed MMP REIT owns part interests in the Wisma Atria shopping complex and Ngee Ann City. - CNA/ch
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