Fitch Affirms Equity Office Properties on the Blackstone Announcement.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch Ratings has affirmed Equity Office Properties (EOP EOP Educational Opportunity Program (California State University) EOP Executive Office of the President EOP Equity Office Properties Trust (ticker) EOP Emergency Operations Plan EOP Earth Orientation Parameters ) ratings following the company's announcement that it will be acquired by Blackstone Real Estate Partners (Blackstone) an affiliate of The Blackstone Group. EOP's Rating Outlook is Stable. Fitch affirms EOP as follows: EOP Operating Limited Partnership --Long-term Issuer Default Rating (IDR IDR In currencies, this is the abbreviation for the Indonesian Rupiah. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) at 'BBB'; --Senior unsecured debt at 'BBB'; --Revolving and term loan facilities at 'BBB'. Equity Office Properties Trust Equity Office Properties Trust, headquartered in Chicago, Illinois, is the largest owner of office buildings in the United States. It was formed in 1976 by Samuel Zell [1] and in February 2007, was acquired by the Blackstone Group for $23 billion plus the assumption of --Long-term Issuer Default Rating (IDR) at 'BBB' --Preferred Stock at 'BBB-'. It was indicated within EOP's press release that Blackstone will likely merge EOP into a Blackstone affiliate. It is Fitch's understanding that Blackstone will redeem or tender for all outstanding debt, including preferred stock. At which time, EOP's ratings will be withdrawn. Although the company has not definitively outlined its plans, Blackstone is likely to significantly lever up the remaining structure and encumber To burden property by way of a charge that must be removed before ownership is free and clear. Property subject to an encumbrance may have a lien or mortgage imposed upon it. most of the unencumbered assets. Existing bond covenants prevent excessive leverage, which leads to the likelihood of repayment of outstanding bonds. Current unsecured bondholders are protected with a fairly standard REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). covenant package of debt <60% of adjusted total assets, secured debt <40% of adjusted total assets, consolidated income available for debt service >1.5x and total unencumbered assets >150% of unsecured debt. Based on Fitch-calculated pro forma numbers, it would take just over $1.4 billion in additional debt to trip the debt-to-adjusted asset covenant, which appears to be a limited amount of additional debt, particularly in regards to the level by which a firm like Blackstone typically funds its acquisitions. Although there is a degree of execution risk involved with the deal, it should be noted that Blackstone has acquired real estate investment trusts (REITs) in the past and recently closed on its acquisition of CarrAmerica Realty Corporation (CarrAmerica). Subsequent to the close, Blackstone had a successful tender offer for CarrAmerica's outstanding senior unsecured notes. Moreover, it should be mentioned that the transaction is not contingent on receipt of financing by Blackstone. Headquartered in Chicago, Illinois, Equity Office Properties is a REIT focused on office properties. As of Sept. 30, 2006, EOP owned wholly or in partial interests 108.6 million square feet, comprising 580 office buildings in 16 states and the District of Columbia District of Columbia, federal district (2000 pop. 572,059, a 5.7% decrease in population since the 1990 census), 69 sq mi (179 sq km), on the east bank of the Potomac River, coextensive with the city of Washington, D.C. (the capital of the United States). . Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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