Logistics tenants are under pressure while retail woes continue
10.11.22
Businesses in the Logistics Sector are the Highest Risk Tenants, while those in Healthcare and Education present the lowest risk. These are the findings of the INCANS Top 200 Averages for Q2 2022.
The ratings, created by Income Analytics, give Real Estate Professionals a likelihood of Tenant Failure by using Advanced Statistical Modelling. The lower the score, the higher the risk of default.
The following are most challenged sectors using data to the end of Q2 2022:
• Logistics: The surprisingly high tenant default risk can in part be explained by the operational nature of small logistics businesses’ leases; leases end when contracts end. However, it signals a trend of logistics businesses succumbing to the pressure of the Retail Landscape and Supply Chain crisis.
• Leisure: The Leisure Sector continues to reel from the impact of the pandemic, as well as the cost-of-living crisis. While many have gone bust, others continue to struggle.
• Retail: The Retail Sector’s struggle is to be expected due to the structural shift away from bricks-and-mortar sales to online retail, a challenge exacerbated by the pandemic.
When Sectors are broken down further, three subsectors stand out:
• Motor Dealerships: A perfect storm is hitting the sector, combining the move to electric vehicles with supply chain challenges and a shift to online sales.
• Pubs, Restaurants and Hotels: The impact of the pandemic is making way for the impact of the cost-of-living crisis as spending falls.
• Department Stores: The score is high but reflects the low number of department stores left as many close their doors or move to online.
INCANS Top 200 Averages Methodology
The INCANS® Top 200 Averages have been developed by Income Analytics using company level data provided by Dun & Bradstreet. The figures are calculated at the end of each quarter generating an average % probability of failure for the top 200 companies in each of the 83 x SIC 2 industry code type across a particular country or geographic region.
What is the INCANS® Tenant Global Score?
The INCANS® Tenant Global Score is a normalised international cross border score that predicts the likelihood that a company will seek credit relief or, worse, go out of business within the next 12 months. The scale is based on the historical default data from every company over recent history. A higher score indicates a lower probability of failure or default.
It can be interpreted as the rough percentile the company sits in against all global companies in terms of their failure risk over all modern history. For example, 100/100 means that the company is broadly in the top 1% of all global companies that have existed over modern history – it is least likely to fail. A score today in any country is comparable in risk level with the same score at any point in time in any other country.
Please find attached link to view full T200 Report
Related Stories
Q2 2024 Income Analytics T200 Reports
September 23rd 2024, London. Income Analytics' releases the latest T200 reports showing a lead for Healthcare while Hotels lag.
Divergence within UK Retail Parks
July 29th 2024, London. UK Retail Parks have some strong occupiers, but there are weaker credit risks landlords should look out for.
Office Inflection
July 19th 2024, London. Investors to make sense of the strong credit ratings of many of their typical office tenants, with slowing take-up and falling values across the sector.
Anne Conlan Joins Income Analytics
July 9th 2024, London. Anne Conlan has joined Income Analytics as Account Director to support existing clients.
Income to Drive Total Returns
July 4th 2024, London. Real estate association INREV released a survey showing 79% of respondents believe income will drive return. How are investors ensuring they have strong, stable cashflows?
Q1 2024 Income Analytics T200 Reports
May 22nd 2024, London. Office occupier scores are stable across all regions, while some UK sectors are being hit by the cost of living crisis.
Q4 2023 Income Analytics T200 Reports
March 6th 2024, London. UK retailer scores struggle to improve while European logistics operators trend higher. Healthcare continues to be strong globally.
Income Risk is Specific. Avoid Averages.
Focusing on averages can hid tenant specific risks.
Q3 2023 Income Analytics T200 reports
November 28th 2023, London. A common theme across all our regional T200 reports is a recovery of the leisure sector tenants post-pandemic. They have bounced back from a low base, and typically record INCANS® Tenant Global Scores below their regional averages, but they are the fastest improvers.
Matthew Richardson Interview: Further Corrections and Opportunities to Emerge
The main trends impacting the sector are non-property, external factors, our co-founder & CEO Matt Richardson pointed out when speaking with Real Asset Media at EXPO Real 2023. These are, notably, interest rates, central bank policy and political policy.
Q2 2023 Income Analytics T200 reports
August 22nd 2023, London. The latest T200 reports from Income Analytics (INCANS) shows a mixed picture for retail sector tenants across the UK, Western Europe and North America. In Europe, retailers score below their regional averages, while in North America they trend above the average. The leisure sector has improved but remains below average in Western Europe, while has rebounded after the pandemic to score above average in the UK and North America.
Q1 2023 Income Analytics T200 reports
June 20th 2023, London. The latest T200 reports from Income Analytics (INCANS) shows the UK hospitality tenants continuing to be the best improvers, albeit from a low base after the pandemic. However, their European counterparts have not shown as much improvement. European pubs & restaurant scores have remained static over the last 12-months. In the US however the same tenants are seeing falling scores. Perhaps discretionary spend has been hit harder in the United States. Motor dealerships, a representation of larger discretionary spending, has seen tenant scores (and therefore the likelihood of default) fall across all three regions.
Income Analytics welcomes new team members
Michiel Foekens has joined Income Analytics as Director of Sales to help drive our exciting and ambitious growth plans.
Income Analytics Launches Income Risk Reports “T200”
April 27th 2023, London. The Income Analytics (INCANS) UK T200 report shows hospitality sector tenants are less likely to default than 12 months ago. The sector is not out of danger, with average rates still below the UK all sector average, but there is clear improvement. Pubs & restaurants recorded the largest positive change across all sectors.
Real estate data veteran Mallinson joins Income Analytics
February 6th 2023, London. Income Analytics (INCANS) announced today that Simon Mallinson has been appointed as its Chief Operating Officer. Established in 2020, INCANS is focused on helping clients quantify tenant income risk and minimise future losses. “We are excited Simon Mallinson has joined us as we enter the next stage of our growth” said Matthew Richardson, co-founder and CEO of INCANS. “Simon has a wealth of global experience delivering real-time, actionable data to real estate professionals and is the right individual to reinforce INCANS growth”.
Retailer health check: who will be next after Joules?
Great to see our tenant default analysis feature in a recent piece by React News.
How NewRiver is stress-testing its portfolio
In a recent article run by EG, Pui-Guan Man looks at how real estate investors and owners are using INCANS® scores to help quantify the future cashflow at risk caused by potential tenant defaults.