Orco Property Group SA's rating was lowered one level after the real-estate developer operating in central and eastern Europe in June bought a company in Germany.
The national-scale rating was reduced to Baa3.cz from A3.cz, Moody's Investor Service said in a press release today, citing risks stemming from the acquisition of Viterra Development. The downgrade „reflects the increased exposure of Orco to more matured markets in western Europe” and „the expected impact of this acquisition on its financial profile,” Moody's said. It also stems from „the refinancing risk resulting from a rating trigger in the company's bond documentation.”
The real-estate developer, with properties in the Czech Republic, Germany, Budapest, Moscow and Warsaw, has focused on central and eastern Europe since it entered the region in 1991 to benefit from property prices after the fall of communism. Viterra's operations should account for estimated revenue of €100 million ($127 million) in the second half of this year, Orco said. Germany now represents 20% of Orco's portfolio from some 3% late last year. Moody's outlook for Orco is stable. (Bloomberg)