Fitch cuts Washington Prime

Fitch said it downgraded the long-term issuer default ratings of Washington Prime Group, Inc. and its operating partnership, Washington Prime Group, LP, to B from BB-. The outlook is negative.

“The downgrade reflects Fitch's views of increasing headwinds in brick-and-mortar retail and WPG's high exposure to the deteriorating performance of department store anchors and apparel and commodity retailers. WPG's operating metrics have worsened to a degree that Fitch believes may require collateralizing of its credit facility absent material improvement in the next 12-24 months. The company's FCF profile (cash flow from operations less recurring capex and common dividends) weakened to negative territory in FY19 and Fitch anticipates WPG will need to cut its dividend to generate positive FCF in FY20,” said Fitch in a press release.

The company's access to capital is limited relative to other U.S. equity REITs, and it remains unable to access unsecured bond and common equity capital at economical levels, Fitch said.

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