Creditreform Rating has confirmed the SME Issuer Rating of SIGNA Prime Selection AG with A+ and replaced the addition "watch NEW" with a stable outlook. The main reason for this is the fact that the creditors' meeting of Galeria Karstadt Kaufhof GmbH (GKK), which is a tenant of various properties owned by SIGNA Prime Selection AG, approved the insolvency plan drawn up by the management of GKK for the restructuring of the department store chain on 01.09.2020, as part of the protective shielding procedure. On 30.09.2020 the Essen District Court cancelled the insolvency proceedings concerning the assets of GKK. As a result, the risks from the properties leased to GKK have been significantly reduced. In addition, the SIGNA Group has been able to further optimize or supplement its existing real estate and trading portfolio in the current business year. This includes the sale of 21 GKK retail properties and an office property in Frankfurt-Eschborn ("The CUBE") and the acquisition of a real estate portfolio of the luxury department store chain "Globus", Switzerland in a 50:50 joint venture. The previously stable real estate portfolio in first-class macro and micro locations, mainly in Germany, Austria and Switzerland, thus contributes to the rating. Including the 7 new Globus properties and 7 so-called minor assets, the portfolio currently comprises 31 properties with a focus on inventory management as well as 16 development projects and 12 trading properties The Executive Board reaffirmed its budget planning of May 2020 to the Supervisory Board in September. Based on this, and based on its half-year figures for 2020 the Group continues to show sufficient profitability and (external) financing power, as well as satisfactory balance sheet ratios and loan-to-value ratios despite certain negative COVID-19 related effects.
The further course of the COVID 19 pandemic and the further countermeasures taken by governments to contain it remain to be observed. The current intensification of the pandemic could further worsen the negative economic development in the markets and industries relevant to SIGNA Prime Selection AG. Due to the high quality real estate portfolio and sufficient liquidity, we do not see any immediate risk for the rating object, but we do not completely rule out negative effects in the medium term with declining profitability. Currently, the Group's rentable space can be mainly allocated to the retail and hotel segments. At the moment, these sectors are generally among the more severely affected and sensitive sectors of the economy in terms of the pandemic. Most of the remaining rentable space is allocated to the office segment, which could be affected in the medium term by an increasing trend towards digitalization and Home Office. Under the current conditions, the dividend from the net income for 2019 of around EUR 201 million also has a limiting and dampening effect on the rating.