S&P trims Forest City Realty

S&P said it trimmed 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 are 4.

“Forest City Realty Trust Inc. has no cushion under its fixed-charge coverage (FCC) covenant for its credit facilities (revolver and term loan) due to pressure from increasing financing cost from its high exposure to variable rate debt, and has yet to refinance its revolving credit facility due in December 2023,” S&P said in a statement.

“We expect Forest City to selectively dispose of mature assets, directing proceeds toward the revolver balance. However, thus far in 2023, the pace of asset sales has been slow, and we are unsure of the magnitude of dispositions the company will complete before year-end. However, the company is in discussion with the sponsor for a line of credit from BSREP III, which would alleviate cash shortfalls,” the agency said.

The outlook is negative.

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