This article is from the Australian Property Journal archive
THE unlisted wholesale Dexus Wholesale Property Fund has received an ‘A’ long-term credit rating and a stable outlook from Standard & Poor's.
S&P credit analyst Brenda Wardlaw said the ‘A’ rating on DWPF reflects opinion of the fund’s conservative gearing policy, stable cash flow from a high-quality portfolio of diversified Australian assets, and minimal exposure to development risks.
“These strengths mitigate the group’s exposure to discretionary consumer expenditure, the cyclical office and industrial markets, and the potential for higher development exposure over time. The fund’s $250 million of bank debt facilities maturing in February 2011 pose a key credit risk, although we expect these facilities to be successfully refinanced in a timely manner,” she added.
Wardlaw said the stable outlook reflects expectation that DWPF will maintain a conservative approach to development exposure and its capital management at the fund’s targeted range of 10%–20%.
However, she said a downward rating trend could result if the fund were to engage in a more aggressive growth strategy.
“This would be evidenced by a material expansion in DWPF’s development activity or investments in higher risk asset classes or geographies, resulting in deterioration in the group’s credit metrics, and gearing above 20% for an extended period.
“A higher rating would require a more conservative financial profile to accommodate further growth,” she concluded.
Australian Property Journal
