OREANDA-NEWS. Fitch Ratings does not anticipate changing its Rating and/or Outlook for Brixmor Property Group, Inc. (NYSE: BRX) and its operating subsidiaries Brixmor Operating Partnership, L.P. and Brixmor LLC (collectively, "Brixmor" or "the company") following today's resignations of the company's Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and another accounting executive.

The management changes follow a board investigation that concluded that specific company accounting and financial reporting personnel were selectively smoothing income items between reporting periods to show consistent quarterly same-store net operating income (SSNOI) growth.

Fitch views the disclosed restatements of the company's SSNOI growth as generally immaterial and the company's liquidity position remains adequate. However, Brixmor's near-term borrowing costs could increase and access to capital could decrease. Fitch could take a rating action if the company's capital access weakens materially and/or if the company discloses additional inaccuracies in in its financial reporting.

Fitch's primary concern is the unanticipated inability for Brixmor to file its 2015 form 10-K with the SEC within the next 30 days, as this could cause a technical default under the company's bank-syndicated revolving credit facility.

Experienced Interim CEO

Brixmor has appointed Daniel Hurwitz as Interim Chief Executive Officer, effective immediately. Mr. Hurwitz is generally well known and highly regarded to REIT investors based on his prior tenure as CEO of DDR Corp. and the founder and CEO of Raider Hill Advisors, LLC. Mr. Hurwitz will also be appointed to serve on the company's board of directors.

Mr. Hurwitz has indicated that identifying a new CFO is an urgent and immediate priority, and the absence of a CFO could elevate uncertainty regarding the company's financial strategy. Fitch does not expect Mr. Hurwitz to be considered in Brixmor's permanent CEO search; however, he has indicated that he will remain on its board to help facilitate the CEO transition.

SSNOI Changes Largely Immaterial

The changes to quarterly SSNOI outlined by Brixmor are largely immaterial and the full-year figures are essentially unchanged, which is more important from an operational and asset quality perspective. Fitch has generally de-emphasized SSNOI growth rates in its analysis of Brixmor, given the company's strategic emphasis on redevelopment and anchor repositionings. Fitch views these activities as an attractive risk-adjusted use of the company's capital, but not necessarily emblematic of the inherent, sustainable growth elements of the company's property portfolio.

Adequate Liquidity

Brixmor's liquidity is adequate to handle its near-to-medium term needs. Fitch believes Brixmor will retain access to the unsecured bond market based on the strength of the company's portfolio, balance sheet and interim management; however, its cost of capital will likely increase as a result of today's announcement. Primary equity issuance is unlikely until new executive management is named, particularly in light of today's approximate 20% decline in the company's share price. The company has $1.2 billion of debt maturing during 2016 - all of which relate to secured property level mortgages, which we expect Brixmor to unencumber with long-term unsecured public bond issuance proceeds.

In the event that the company is unable to access the public or private bond markets on attractive terms, the debt yields for the company's secured mortgage maturities should be able to support mortgage refinancings. Brixmor also has full availability under its $1.5 billion revolving credit facility.