Moody’s Upgrades VEREIT’s Debt Rating
Moody’s Investors Service upgraded VEREIT Operating Partnership L.P.‘s senior unsecured rating to Baa3 from Ba1 and VEREIT Inc.‘s (NYSE: VER) preferred shelf rating to (P)Ba1 from (P)Ba2. Vereit is the parent company of Cole Capital, a leading sponsor of non-traded real estate investment trusts. The rating outlook is stable.
Moody’s noted that the ratings upgrade reflects the company’s progress in achieving several of the goals set forth in its 2015 business plan, which among other objectives included strengthening the balance sheet, improving its credit metrics and enhancing the quality of the real estate portfolio.
“The stable outlook incorporates the credibility and seasoning of the REIT’s management team established over the past two years and its commitment to an investment-grade rating profile,” said Moody’s. “The outlook entails VEREIT continuing to prudently manage its balance sheet and to consistently maintain, at a minimum, its current credit profile and portfolio quality while pursuing its growth initiatives on a leverage-neutral basis.”
Moody’s pointed out that the REIT’s positive credit factors are offset by its clustered debt maturity schedule with a weighted average maturity term of slightly over four years; pending lawsuits related to the 2014 legacy American Realty Capital Properties accounting scandal, which could impact liquidity; and its relatively short track record as a publicly traded company.
VEREIT is a publicly traded real estate investment trust that operates through two business segments, its real estate investment segment and its investment segment, Cole Capital. Through its REI segment, the company owns and actively manages a diversified portfolio of retail, restaurant, office and industrial assets. Through the Cole Capital segment, the company is responsible for raising capital for and managing the affairs of the Cole REITs. As of December 31, 2016, VEREIT owned 4,142 properties, totaling more than 93 million of rentable square feet across the United States, Puerto Rico and Canada. Through Cole, VEREIT manages $7.3 billion of gross real estate investments.
