S&P cuts Flamingo II, Emeria

S&P said it lowered its ratings on Flamingo II Lux GP Sarl and Emeria SASU to B- from B, the issue-level rating on the group's senior secured debt to B- from B and the issue-level rating on its junior subordinated debt to CCC from CCC+.

The 3 recovery rating on the senior secured debt, including the proposed add-on, is unchanged, indicating meaningful (50%-70%; rounded estimate: 50%) recovery in a simulated default, the agency said. The 6 recovery rating on the junior subordinated debt is also unchanged, indicating negligible recovery (0%-10%; rounded estimate: 0%) in a simulated default.

“The downgrade reflects Emeria's weaker-than-expected operating performance and our expectation for continued muted activity in the French real estate market through 2024. Although the company's joint property and lease management businesses continue to exhibit resilience, its real estate brokerage (REB) segment remained challenged by macroeconomic conditions in 2023, with an up to 25% year-over-year decline in its revenue,” S&P said in a press release.

The agency said it now sees the company's S&P Global Ratings-adjusted leverage rising to about 14x, which is above its previous forecasts of 11x-12x.

The outlook is stable.

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