Moody's lowers Charter Hall REIT view to negative

Moody's Investors Service said it changed the outlook on Charter Hall Retail REIT's Baa1 issuer rating to negative from stable.

The agency also said it affirmed the Baa1 issuer rating and senior unsecured rating.

The outlook revision is driven by the company's elevated financial leverage, which is likely to be above the tolerance level set for its Baa1 rating, Moody's said.

The agency said it anticipates that financial leverage will show deterioration in the six months to December 2017 from fiscal year ending June 2017, when its net debt-to-EBITDA ratio was already close to the tolerance level.

Despite completed asset sales of A$142 million, new property acquisitions, development expenditure on Wanneroo and Lake Macquarie shopping centers and unit buybacks will likely result in increased debt, Moody's explained.

The ratings reflect its good business and operating profile, which are underpinned by its high occupancy levels and long weighted-average lease expiry of about seven years, the agency noted.

Its credit profile also benefits from a well-balanced and geographically diverse property portfolio, Moody's said.

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