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Rating action

Scope Ratings GmbH (Scope) has today affirmed the issuer rating of Norwegian Property ASA (NPRO) at BBB- and revised the Outlook to Stable from Negative. Scope has concurrently affirmed the BBB ratings on the following senior secured bonds: NO0013350538, NO0013251801, NO0013251827, and NO0013270348.

Following increased pressure on NPRO's credit metrics that led Scope to lower the company's financial risk profile in September 2025, NPRO's owners have, as expected by Scope, taken measures to address the situation and performed a capital increase (the ‘transaction’). The capital increase was carried out through a contribution in kind, namely the transfer of shares of the Swedish commercial real estate (CRE) company Fabege into NPRO. This transaction lowered the leverage ratio, as measured by Scope-adjusted loan/value* (LTV), to 40%, and provides the additional benefit of generating a recurring cash flow through quarterly dividends from Fabege.

The revision of the Outlook to Stable from Negative reflects the stabilisation of NPRO's credit metrics at levels commensurate with its investment grade rating, following a period of increased leverage and depressed interest cover.

The full list of rating actions and rated entities is at the end of this rating action release.

Key rating drivers

Business risk profile: BBB- (unchanged). NPRO’s business risk profile continues to be supported by its substantial market share of Grade A office space in sought-after locations in the Oslo area. While its indirect access to a different jurisdiction and a large portfolio of properties via its 21.8% shareholding in Fabege provides cash flow streams, the impact on business risk is limited due to the non-controlling stake, with some benefit to market position and diversification.

NPRO’s portfolio has remained stable since the significant acquisition of Telegrafen in the Central Business District and the takeover of Martin Linges Vei 33 in Fornebu. The WAULT remained stable at 6.1 years in Q4 2025, outperforming the market average of four years. The spike in EPRA vacancy observed in Q2 2025, when it surged to 9.8% from 6% due to Tietoevry (the company's fourth-largest tenant) vacating its premises in Fornebu, has fallen again to 8.2% in Q4 2025. High profitability, as measured by an EBITDA margin of 83% (FY 2025), coupled with low volatility, provides strong support to the issuer’s business risk profile.

A limited geographical focus on the Oslo area remains a constraint. Thanks to its newly gained shareholding in Fabege, NPRO has increased its visibility in different markets and gained market value in its total assets, which improves its access to capital in Scope's view, while the company gained access to a new source of cash flow unrelated to its current locations, tenants and properties. However, tenant concentration in NPRO’s own portfolio remains high, with the top three and ten largest tenants accounting for 31% and 49% of total rental income, respectively, as of the fourth quarter of 2025. The two largest tenants are Telenor (15.6%, down from 17.6% last year) and Equinor (10.7%). Tenant concentration remains a credit risk, even beyond these two largest tenants. This is evident from the recent departure of NPRO's fourth-largest tenant, Tietoevry, and the subsequent impact this has had on vacancy rates and cash generation in mid-2025. In Scope’s view, concentration risks are partially mitigated by: i) the young age of NPRO’s portfolio and its high proportion of BREEAM-certified buildings (ESG factor: credit-positive), which facilitate leasing; and ii) the high credit quality of Telenor and Equinor as well as the implied investment-grade credit quality of the remainder, based on historical default statistics and broad tenant industry diversification.

Financial risk profile: BBB- (revised from BB). The capital increase pursued in December 2025 through the contribution of Fabege shares to NPRO on a debt-free basis transformed the company’s financial risk profile and significantly reduced the mounting pressure on the rating. The immediate effect was on LTV, which was lowered to 40% from 52%, with the recurring quarterly dividends set to benefit the interest cover going forward.

On 15 December 2025, NPRO increased its share capital by issuing 497m new shares at a price of NOK 12.57 per share. This was carried out as a contribution in kind, whereby the company's sole owner, Realty Holdings (NOR) Limited, transferred 72m shares in Fabege AB to NPRO in exchange for the aforementioned new shares. This equates to a 21.8% shareholding in the listed Swedish CRE company Fabege (measured by capital; 22.9% by votes). Consequently, NPRO’s balance sheet exposure to commercial real estate increased by NOK 9.5bn in Q4 2025 (reflecting Fabege’s investment properties, valued at fair market value and held at equity, representing a 21.8% share). his transaction completes the company’s review process to support its credit quality.

Leverage, as measured by LTV, stood at 51.5% in Q3 of 2025. It had remained at around 53% in both 2024 and 2023, following the significant rise in interest rates in 2022, which caused asset values to decrease. The capital increase lowered the LTV ratio to 40%. Scope notes that NPRO accounts for Fabege’s shares using the equity method, following the company’s main asset: its investment properties. Consequently, positive or negative fair value effects on Fabege’s properties impact NPRO’s LTV; however, such fluctuations are relatively modest compared to potential fluctuations in traded shares. For NPRO’s directly owned properties, Scope expects fair value appreciation of the portfolio to continue to support deleveraging going forward, albeit at a much more gradual pace with almost flat development forecast. Leverage, as measured by debt/EBITDA, fell to 12.9x from 13.7x throughout 2025. The Fabege transaction provides a relatively predictable recurring cash flow through quarterly dividends, which Scope considers in its EBITDA calculation. Anticipated positive rental income developments on CPI-linked contracts and unchanged interest-bearing debt will reduce debt/EBITDA to below 12x in 2026 and towards 11x by 2027.

Interest coverage benefits significantly from the capital increase and its associated recurring cash flows. Being a major pressure point in past rating monitoring, the transaction is expected to improve interest cover to 2.0x in 2026 and towards 2.2x thereafter. The rating agency’s base case assumes an unchanged debt structure and the company has assured Scope that there are no plans to increase debt following this transaction. NPRO has a financial policy of hedging 50%–100% of all variable-rate debt at all times and has a track record of around 65% macro hedging (58% as at end-December 2025). This partially mitigates the negative impact of new borrowing in a high-interest rate environment, as is currently the case in Norway.

Capex cover remains a strength, with the company having achieved free operating cash flow (FOCF) averaging NOK 250m over the last five years. Given the company’s young portfolio, Scope does not anticipate significant investment requirements, except for adaptations related to tenancies. As such, Scope foresees a continuation of positive FOCF, now bolstered by cash flows from Fabege. The company has demonstrated solid internal financing capacity, with neutral-to-positive FOCF throughout the investment cycle.

Liquidity: adequate (unchanged). As of the end of December 2025, NPRO had NOK 110m in cash, NOK 1.9bn in available undrawn facilities and an expected FOCF of NOK 380m over the next 12 months. However, this only partially covers the upcoming debt repayments of NOK 4.4 bn in 2026 and NOK 1bn in 2027, of which NOK 2bn relates to capital market bonds maturing within the next 18 months. However, liquidity risk is considered to be manageable by Scope for the following reasons: i) all outstanding debt is secured on properties with a current LTV ratio of 40%, and NPRO can draw down new debt under existing bonds/facilities up to an LTV of 65% at issuance. This significantly minimises refinancing risk. ii) NPRO has proven access to capital and the banking markets, as evidenced by its frequent issuance of debt. It has also demonstrated its willingness to raise equity on several occasions in recent years. iii) NPRO has a relatively well-diversified maturity profile. Its financial policy ensures that no more than 20% of total debt matures within the next 12 months on a rolling basis.

Supplementary rating drivers: credit-neutral (unchanged). Scope has made no adjustment for other supplementary rating drivers such as financial policy, parent support, or governance and structure.

One or more key drivers of the credit rating action are considered an ESG factor.

Outlook and rating sensitivities

The Stable Outlook reflects NPRO’s strengthened financial risk profile following the capital increase, as well as its robust business model and portfolio of highly sought-after properties in the Oslo area. Scope’s rating case anticipates a stable property portfolio with limited acquisitions and disposals. This results in a LTV ratio of around 40%. Interest coverage is expected to improve to 2.0x in 2026, with a further increase towards 2.2x thereafter. Scope does not include any dividends or extraordinary cash inflows from the NORDR joint venture in the issuer's EBITDA or cash flows, though it recognises the potential for such cash flows to materialise.

The upside scenarios for the ratings and Outlook are (individually):

1. Significant growth in assets leading to improved cash flow diversification
    
2. Loan/value ratio significantly below 40% and interest cover above 2.5x on a sustained basis

The downside scenarios for the ratings and Outlooks are (collectively):

1. Loan/value to increase above 45% on a sustained basis
    
2. Interest cover to remain below 2x on a sustained basis

Debt ratings

Scope has affirmed the rating on the company’s senior secured bond instruments, based on the underlying issuer rating of BBB-/Stable. The senior secured notes benefit from a first-ranking pledge on specific properties. In the event of a hypothetical default, additional pro rata proceeds from any liquidation proceeds would be distributed pari passu among all holders of senior secured debt.

Environmental, social and governance (ESG) factors

Several new ESG reporting requirements were introduced into legislation in Norway in 2022. NPRO reports in accordance with the Transparency Act and the Equality and Anti-Discrimination Act, and also reports its climate report according to the GHG Protocol, including Scope 1, 2 and 3. NPRO has set environmental targets in line with the UN SDGs, with a base year of 2019 and a target year of 2025: 5%-10% reduction in energy consumption for the existing portfolio (achieved), 10%-20% reduction in CO2 equivalents (CO2 emissions per sq m reduced to 6kg in 2024 from 14kg in 2019) and 60%-65% for sorted waste (67% achieved in 2024). As part of its ESG strategy, NPRO aims to have all its properties achieve a BREEAM rating or BREEAM-in-Use of ‘Very Good’ or better by 2026. Approximately 89% of all office, retail and restaurant space is already certified, increasing the attractiveness of the portfolio and strengthening asset quality, which will support rental growth and stable cash flow in the future (ESG factor credit positive).

All rating actions and rated entities

Norwegian Property ASA

Issuer rating: BBB-/Stable, Outlook change

Senior secured debt instruments rating (NO0013350538): BBB, affirmation

Senior secured debt instruments rating (NO0013251801): BBB, affirmation

Senior secured debt instruments rating (NO0013251827): BBB, affirmation

Senior secured debt instruments rating (NO0013270348): BBB, affirmation

*All credit metrics refer to Scope-adjusted figures.

Stress testing & cash flow analysis
No stress testing was performed. Scope Ratings performed its standard cash flow forecasting for the company.

Methodology
The methodologies used for these Credit Ratings and/or Outlook, (General Corporate Rating Methodology, 14 February 2025; European Real Estate Rating Methodology, 2 June 2025), are available on scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): registers.esma.europa.eu/cerep-publication. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on scoperatings.com/governance-and-policies/rating-governance/methodologies.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Rated Entity and/or its Related Third Parties participated in the Credit Rating process.
The following substantially material sources of information were used to prepare the Credit Ratings: public domain, the Rated Entity and Scope Ratings' internal sources.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting these Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and/or Outlook and the principal grounds on which the Credit Ratings and/or Outlook are based. Following that review, the Credit Ratings and/or Outlook were not amended before being issued.

Regulatory disclosures
These Credit Ratings and/or Outlook are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and/or Outlook are UK-endorsed.
Lead analyst: Thomas Faeh, Executive Director
Person responsible for approval of the Credit Ratings: Philipp Wass, Managing Director
The Credit Ratings/Outlook were first released by Scope Ratings on 28 April 2022. The Credit Ratings/Outlook were last updated on 29 September 2025.

Potential conflicts
See scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings, as well as a list of Ancillary Services and certain non-Credit Rating Agency services provided to Rated Entities and/or Related Third Parties.

Conditions of use / exclusion of liability
© 2026 Scope SE & Co. KGaA and all its subsidiaries including Scope Ratings GmbH, Scope Ratings UK Limited, Scope Fund Analysis GmbH, Scope Innovation Lab GmbH and Scope ESG Analysis GmbH (collectively, Scope). All rights reserved. The information and data supporting Scope’s ratings, rating reports, rating opinions and related research and credit opinions originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data. Scope’s ratings, rating reports, rating opinions, or related research and credit opinions are provided ‘as is’ without any representation or warranty of any kind. In no circumstance shall Scope or its directors, officers, employees and other representatives be liable to any party for any direct, indirect, incidental or other damages, expenses of any kind, or losses arising from any use of Scope’s ratings, rating reports, rating opinions, related research or credit opinions. Ratings and other related credit opinions issued by Scope are, and have to be viewed by any party as, opinions on relative credit risk and not a statement of fact or recommendation to purchase, hold or sell securities. Past performance does not necessarily predict future results. Any report issued by Scope is not a prospectus or similar document related to a debt security or issuing entity. Scope issues credit ratings and related research and opinions with the understanding and expectation that parties using them will assess independently the suitability of each security for investment or transaction purposes. Scope’s credit ratings address relative credit risk, they do not address other risks such as market, liquidity, legal, or volatility. The information and data included herein is protected by copyright and other laws. To reproduce, transmit, transfer, disseminate, translate, resell, or store for subsequent use for any such purpose the information and data contained herein, contact Scope Ratings GmbH at Lennéstraße 5, D-10785 Berlin. Public Ratings are generally accessible to the public. Subscription Ratings and Private Ratings are confidential and may not be shared with any unauthorised third party.