Brookfield India Real Estate Trust - Rating reaffirmed at 'CRISIL AAA', outlook revised to 'Negative'

CRISIL Ratings has reaffirmed its 'CRISIL AAA' corporate credit rating of Brookfield India Real Estate Trust (Brookfield REIT), while revising the outlook to 'Negative' from 'Stable'.

Brookfield REIT is sponsored by BSREP India Office Holdings V Pte Ltd (part of the Brookfield group). The real estate investment trust (REIT) has stake in five companies which includes four companies comprising of five commercial assets and one company which is the operational service provider.

The outlook revision reflects delay in improvement of leverage and operating performance of Brookfield REIT. The debt of the REIT increased materially last year after acquisition of Candor Techspace N2 (N2), resulting in high loan-to-value (LTV) ratio. Expectation of gradual reduction in the LTV ratio over the last one year has not materialised yet and CRISIL Ratings' sensitised LTV is currently near the threshold of 40%. Gross debt to earnings before interest, tax, depreciation and amortisation (Ebitda) ratio is around 6 times as of March 2023.

Furthermore, the occupancy of the portfolio, which was expected to improve to 87-90%, remained at ~83% which also curtailed improvement in the financial risk profile. Nevertheless, effective economic occupancy, post incorporating income support from the Brookfield group for the N2 asset stands at ~88%. Going forward, the occupancy is expected to improve, backed by the leasing pipeline and demonstration of the same at adequate rates remains important, especially in the context of slowdown in leasing momentum in India due to global economic headwinds. With improvement in occupancy and leverage, CRISIL Ratings expects the LTV ratio to come down to well below 40% on sustained basis and debt to Ebitda ratio below 5 times, which will augur well for the credit risk profile.

Any future acquisition of assets, their funding pattern and consequent impact on the financial risk profile of the REIT will remain key rating sensitivity factors.

The rating continues to reflect the stable revenue profile of Brookfield REIT's assets, benefits from geographical diversification and adequate ability to refinance due to comfortable financial risk profile. These strengths are partially offset by susceptibility to volatility in the real estate sector resulting in fluctuations in rental rates and occupancy.

Shares of Brookfield India Real Estate Trust REIT was last trading in BSE at Rs. 276.04 as compared to the previous close of Rs. 274.99. The total number of shares traded during the day was 2587 in over 153 trades.

The stock hit an intraday high of Rs. 277.99 and intraday low of 275.00. The net turnover during the day was Rs. 714173.00.

Source : Equity Bulls

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BrookfieldIndiaRealEstateTrust RatingUpdate OutlookRevision CorporateCreditRating