GCR publishes the sector risk score for Spanish commercial property
31 July 2019 – GCR Ratings (“GCR”) has published the Corporate
Sector Risk Score for Spanish Commercial Property.
Sector Risk Scores (0-13)
Spanish Commercial Property Sector Risk Score: 8
The Spanish sector risk score of ‘8’
is reflective of expectations of stable annuity income, supported by
medium-long term leases, improving occupancy rates and generally good access to
capital. The overall sector risk profile is weaker when compared to those of
more developed European counterparts, as Spanish real estate is viewed as a
more speculative investment proposition that is prone to higher earnings and
value variability through the cycle. Nonetheless, Spanish real estate is
expected to continue to benefit from structural improvements to the economy,
sound private wealth levels, and additional support to the economy from strong
tourism volumes. Although down from prior highs, international capital inflows
into the sector remain strong, coupled with a new wave of bank participation.
SOCIMIs with strong funding structures are therefore expected to continue to
acquire well-positioned assets deemed non-core by larger REITs, or as some
international investors seek to realise gains from legacy investments.
The GCR Sector Risk Assessment
GCR utilises sector risk scores in conjunction with
the country risk score, to determine the operating environment risk score for
each individual sector within a respective jurisdiction. The sector risk score is
an aggregation of a) cyclicality b) ease of doing business and c) sector specific
dynamics scores, and is intended to provide users with an overview of the major
factors that impact GCR’s assessment of the relative risk of the specific sector.
The Spanish sector risk score has been assessed due to the exposure of certain
corporate(s) in GCR’s corporate rating universe to the country’s commercial
real estate segment. In this regard, selected sector risk scores across a range
of jurisdictions will be introduced to the extent that they impact the credit
risk profiles of corporates in GCR’s ratings universe, and will be updated as
underlying factors evolve.
Sector Head: Corporates
+27 11 784 1771
Deputy Sector head: Corporates
+27 11 784 1771
criteria and research
Criteria for the GCR Ratings Framework,
Criteria for Rating Real Estate Investment
Trusts and Other Commercial Property Companies, May 2019
CREDIT RATINGS ISSUED AND RESEARCH PUBLICATIONS PUBLISHED BY GCR, ARE GCR’S OPINIONS, AS AT THE DATE OF ISSUE OR PUBLICATION THEREOF, OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. GCR DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL AND/OR FINANCIAL OBLIGATIONS AS THEY BECOME DUE. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: FRAUD, MARKET LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND GCR’S OPINIONS INCLUDED IN GCR’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS AND GCR’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND GCR’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL OR HOLD PARTICULAR SECURITIES. NEITHER GCR’S CREDIT RATINGS, NOR ITS PUBLICATIONS, COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. GCR ISSUES ITS CREDIT RATINGS AND PUBLISHES GCR’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING OR SALE.