https://www.taipeitimes.com/News/biz.../25/2003735244
Taipei Financial Center credit outlook downgraded
TAIPEI 101: While rental income is robust, the skyscraper has been affected by falling foreign and domestic visitor numbers because of the pandemic, Taiwan Ratings said
By Crystal Hsu / Staff reporter
Apr 25, 2020
Taiwan Ratings Corp (中華信評) has downgraded the credit outlook for Taipei Financial Center Corp (台北金融大樓) from “stable” to “
negative,” as the operator of the Taipei 101 skyscraper has seen a slump in tourists and shoppers.
The local arm of S&P Global Ratings said the negative outlook reflects the likely deterioration in the company’s credit profile this year and uncertainty over a recovery.
A dire lack of foreign tourists would diminish revenue from its observatory and tourist spending at its shopping mall, the agency said.
The number of foreign visitors dropped close to zero over the past few weeks due to border controls and flight bans to curb the spread of COVID-19.
“We expect international travel to remain muted for six more months, as the number of infections is still on the rise worldwide,” Taiwan Ratings said, expecting a modest recovery toward the end of the year.
That might affect the number of visitors to the observatory and the observation deck’s revenue this year by up to 80 percent, it said.
Local customers have also reduced shopping frequency to avoid infections, it added.
Retail sales at the Taipei 101 shopping center are forecast to drop by 31 to 35 percent given the store’s collection of luxury and fashion brands for which consumption is discretionary in nature, it said.
The office building’s rental income would not be affected by the pandemic, because rental rates are fixed and long-term in nature, it said.
In addition, the Taipei 101 building has built up a strong tenant portfolio, mostly high-profile global firms and large domestic companies that can afford above-average rents, it said.
However, office rent accounts for only 26 percent of overall operating income and would not be sufficient to compensate for the slowdown in other segments, it said.