Industry Research: Corporate

Image placeholder
GCR places South African commercial property on Negative Trend as fragile economy continues to drive high asset, liquidity and funding risk
  • Industry Research: Corporate
  • Year : Aug 2020
Access Now

The Negative Trend reflects GCR’s view that commercial real estate will face persistent funding and liquidity risks over the outlook period, with increased potential of material fair value write-downs and earnings underperformance further reducing financial flexibility. The domestic property market was highly geared going into the COVID crisis, with many mid to large-scale listed funds’ LTVs trending towards 40%-50%+, and unlisted/offshore portfolios held by South African investors typically carrying LTV levels as high as 65%-100%.

Additional Information

Financial institutions, which overwhelmingly underpin real estate financing, have mostly supported proactive treasury risk management in the wake of COVID-19, including interim covenant relief, early refinancing, and added facility headroom to allow for interest capitalisation if required. Nonetheless, the financial sector is re-rating its property exposures for higher operating and funding risk assumptions, amidst rising currency/synthetic debt exposures, as well as covenant and other significant liquidity constraints.

Related Publication

South African Private Healthcare sector

The healthcare enquiry found that the three large hospital group maintain a dominant position in terms of providing hospital services, which has se...

Rebosis Property Fund Limited (2015-05)

A Credit Rating report is a research report providing detailed analysis utilised by GCR in the accordance of a Credit Rating.

Rating Securitisation Transactions Involving Intermediate SPVs

This report explains GCR’s approach to the risks related to each of these SPVs to rate the debt issued by the Issuing SPV. Please note that t...

Available Purchase Options: