Moody's flips TAG outlook to negative

Moody's Investors Service said it changed TAG Immobilien AG’s outlook to negative from positive and affirmed its Baa3 long-term issuer rating.

TAG plans to buy Robyg SA for about €550 million in cash, after a €150 million payment by Robyg to the shareholders, plus the assumption of debt.

"The rating action reflects that TAG's intention to purchase Robyg SA (Robyg), the largest Polish residential developer, will weaken the company's financial and business profile," said Oliver Schmitt, a Moody’s vice president and senior credit officer, in a press release.

"At the same time the transaction will create over time a meaningful longer term Polish rental business, which will add geographical diversification to TAG's German operations, through higher quality new built residential units in a jurisdiction that benefits from favorable long-term fundamentals for residential real estate activities, " Schmitt added.

Moody’s noted it forecasts TAG’s debt to asset hovering around 50% and net debt/EBITDA exceeding the mid-teens range over the next 12 to 24 months also on higher capital needs resulting from growing share of development activities.

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