Ana Lai, senior director and analytical manager at S&P Global Ratings, participated in a video interview at Nareit’s REITwise: 2018 Law, Accounting & Finance Conference in Hollywood, Florida.
According to Lai, the REIT industry still has “fairly good” access to the capital markets, particularly on the debt side. S&P is expecting total debt issuance in 2018 to be flat to slightly below last year’s level, which was very robust, she noted.
While interest rates are expected to rise several times this year, they remain low from a historical perspective. This makes it possible for issuers to still find opportunities to refinance debt, Lai said.
In terms of formulating its ratings analysis, S&P looks at financial and business risk, Lai explained.
For S&P, key metrics to consider include debt to earnings before interest, taxes, depreciation and amortization (EBITDA) and fixed charge coverage. Lai noted that S&P has a specific definition of EBITDA, which is close to Nareit’s EBITDAre definition, but makes certain adjustments to have the metric measure recurring cash flow.