Quarter 674-675 LLC’s Credit Rating Affirmed At ‘AA-’; Outlook Stable
OREANDA-NEWS. National Rating Agency has affirmed, with a stable outlook, its national sale ‘AA-’ credit rating on Quarter 674-675 LLC (Quarter), based on a support rating of reflecting the probability of support from O1 Properties Limited. Quarter’s stand-alone national scale credit rating is ‘A’. The company’s first-time ‘AA-’credit rating from NRA, falling into the “Holding and Financial Companies” section of NRA’s rating list, was assigned on Jan. 29, 2013. The latest rating action on Quarter (‘AA-’credit rating affirmation) dates Dec. 30, 2014.
The rating is supported by Quarter’s assets, whose market value by far exceeds their book value, allowing the company’s debt burden to be regarded as reasonable. The main factors determining the current rating level are the unique asset controlled by the company and Quarter’s still predictable and stable operating performance. NRA also notes the parent group’s ability to provide a strong extraordinary support to the company (Quarter’s is a member company of the O1 PROPERTIES LIMITED’s group, acting as a balance sheet provider for the group’s key asset, the Belaya Ploshchad business center.
Offsetting these strengths are the worsening macroeconomic situation, which affects, among other things, the commercial property sector, the business center falling price, and curtailing rental flows, in face value terms (without adjustment for the exchange rate), associated with declining occupancy rates. All this weakens the company’s long-term growth prospects and may impair its access to funding. Currently, the company’s key risk is the high level of debt, which is 100% FX-denominated. That said, Quarter is in a better position relative to peers due to the dominance of foreigners in its tenant base. We also note the way Quarter hedges its currency risk, namely, the maintenance of FX rates in its rental agreements with all business center tenants.
Quarter is the owner of the Belaya Ploshchad Class A business center, located in Moscow, at the intersection of Butyrsky Val and First Tverskaya-Yamskaya Ulitsa, close to Belorusskaya metro station. The business center was commissioned in 2009. Its total floor area is 76,500 sq.m. More than 2/3 of its premises are currently occupied under existing an average tenancy duration of 8 years. The most important tenants are large international and Russian companies, including PwC, Deloitte & Touche, McKinsey & Company, BNP Paribas, Chelyabinsk Tube-Rolling Mill and Cherkizovo Group.
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