Moody’s Upgrades Prologis, L.P.’s Senior Unsecured Rating to A3
The rating service also upgraded the ratings on Prologis’ preferred stock to Baa1 from Baa2.
The rating upgrade is a recognition of the progress the company has made in solidifying its balance sheet as it continues to grow. And it reflects an assessment by Moody’s that the company’s global operations, financial structure and market operations are bearing fruit.
“The ratings upgrade reflects the REIT's substantial improvement in its operational metrics,” Moody’s noted, citing growth in net operating income, the company’s high 96.6 percent occupancy rate, and “strong positive rental growth for the last eight quarters.”
Moody’s and S&P had placed a positive outlook on Prologis’ debt rating in the first quarter. "Back in April, during our first quarter 2016 earnings call, we said we believed we were on the doorstep of an A rating," said Prologis chief financial officer Tom Olinger. "We now have one of the strongest balance sheets in the industry. Many thanks to our dedicated teams across the globe who helped make this happen."
Prologis is the world's leading owner, manager and developer of logistics real estate. The company has $64.9 billion in total assets under management, with an operating portfolio of 3,347 industrial properties in 20 countries in the Americas, Europe, and Asia.
The upgrade is a recognition that the company continues to scale and grow its operations while managing its balance sheet and debt carefully. Moody’s noted that the ratio of the company’s net debt to EBITDA has fallen and is expected to decline further in 2017, and that the company has refinanced most of the unsecured debt that is scheduled to mature in the next several quarters. “The REIT's operations continue to benefit from strong industrial real estate fundamentals,” Moody’s noted.
Moody’s also cited the company’s “global leadership position in the warehouse distribution business, coupled with a strong management team and demonstrated access to committed equity capital at its funds and access to all capital markets.”
The current outlook on Prologis’ debt is stable, because Moody’s believes the company “will continue to generate meaningful cash flows, maintain strong liquidity and proactively manage debt maturities on balance sheet and at the funds level.”