S&P cuts Forest City Realty Trust

S&P said it lowered its ratings for Forest City Realty Trust Inc. and its credit facilities and term loan to B from B+. The recovery ratings on the loans remain 4.

“Forest City Realty Trust Inc. has significant exposure to floating-rate debt and its fixed-charge coverage ratio (FCC) has deteriorated sharply over the past few quarters due to higher interest rate expense coupled with pressured EBITDA generation from declines in office occupancy,” S&P said in a statement.

The agency noted that more than $1.3 billion of Forest City’s mortgages are due in 2023 and its $400 million revolving credit facility matures in December after it exercised its extension option in 2022. “Given the current volatile financing environment, it remains to be seen how the company refinances these maturities and at what rates, which could further pressure its credit protection measures, particularly FCC.”

The outlook is negative.

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