S&P cuts ADO

S&P said it downgraded ADO Properties SA to BB from BBB-, followings its takeover of Adler Real Estate AG.

“Since Adler's credit metrics are weaker than those of ADO, we forecast the combined entity will reach a debt-to-debt-plus-equity ratio of about 50%-52%, and an EBITDA interest coverage of 2.1x-2.3x in the next 12 to 18 months (from 26.9% and 2.8x for ADO at end-2019 on a stand-alone basis),” said S&P in a press release.

“The absence of a clear management and governance structure, limited track record in executing its operational and financial strategy post-transaction, successful integration of the transaction, and a smaller cash flow base to serve its debt compared with peers, further constrain the rating on the combined entity,” the agency said.

The outlook is stable.

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