4 October 2022, 7:00am, Antwerp, Belgium: The Rating Agency Fitch Ratings (‘Fitch’) has reaffirmed the credit rating for VGP NV (‘VGP’ or ‘the Group’) with its Long-Term Issuer Default Rating (IDR) and senior unsecured rating reaffirmed at 'BBB-'. The Outlook on the rating is Stable.

Fitch sees the statement by VGP and Allianz, as issued last Friday, in relation to the postponement of the seed portfolio closing for the Europa joint venture as a market-induced pause, not cessation of JV transfers.

VGP has adequate liquidity to fund 2H22 and FY23 committed capex (much of it pre-let) even if monetisation of assets to JVs are postponed. The pro forma €730 million end-1H22 cash includes the €1 billion of bond proceeds raised in January 2022 (at a blended 2% fixed coupon) and the completed JV closures in 1H22 and July 2022. Additionally, VGP is expected to receive the Munich JV minimum proceeds of €73 million in 2H22 and other sources. This compares to committed capex of around €500 million to be spent and €150 million of debt maturing until end-June 2023.

In its rating affirmation of September 2022, Fitch had calculated that despite an assumed 12% decline in valuations of VGP’s development programme assets, when they are transferred to the JVs, the disposal proceeds would adequately cover VGP’s build-to-cost capital outlay. Furthermore, those assets are income-producing (around 90% pre-let) which supports values.

Fitch’s analytical approach of ‘VGP as HoldCo’ simulates a scenario of no further transfers
to the JVs, effectively leading to VGP funding development and completed assets on its balance sheet. If we assume no further transfers in 2023 and 2024 in Fitch’s updated rating case, ‘VGP as HoldCo’ metrics remain consistent within Fitch’s rating sensitivities for upgrade and downgrade. This is because the size of the current land bank is not an
onerous capital outlay and, as per company policy, completed assets are substantially income-producing.

For further details please refer to the Fitch corresponding press release on the rating agency website: https://www.fitchratings.com/research/corporate-finance/vgp-announcement-reflects-property-valuation-uncertainties-03-10-2022 .

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