Fitch Assigns 'BBB' to BRE Properties' $150MM Sr Note Offering.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 Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has assigned a 'BBB' rating to the recent offering of $150 million 4.875% five-year senior unsecured notes issued by BRE (Business Rules Engine) Software that automates policies and procedures within an organization, whether legal, internal or operational. The use of a rules engine (BRE) requires placing the company rules in an external repository that can be easily reviewed rather than Properties, Inc. (NYSE NYSE See: New York Stock Exchange :BRE). Proceeds will be primarily used to repay outstanding variable-rate line balances on the company's unsecured bank credit facility. Additionally, Fitch affirms the 'BBB' rating on approximately $848 million of outstanding unsecured senior notes of the company due 2005-2014. Additionally, Fitch affirms the 'BBB-' rating on the company's preferred securities. The Rating Outlook is Stable. Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma for the offering, the company's debt service coverage ratio The debt service coverage ratio (DSCR), or debt service ratio, is the ratio of net operating income to debt payments on a piece of investment real estate. It is a popular benchmark used in the measurement of an income-producing property’s ability to produce (EBITDA/total interest expense, including capitalized interest Capitalized interest Interest that is not immediately expensed, but rather is considered as an asset and is then amortized through the income statement over time. In the context of project financing, interest that is paid by additional borrowing. ) for the last 12 months (LTM LTM abbr. long-term memory ) ended March 31, 2005 decreases slightly to 2.46 times (x) from pre-offering calculated 2.55x. The decrease in coverage is a result of refinancing $150 million of debt from a Fitch-calculated LTM weighted average variable interest rate of 3.20% to a 4.875% fixed rate. This coverage metric continues to be adequate for the rating category. This debt offering reduces the company's exposure to variable-rate debt and terms out line of credit borrowings with longer term debt, which Fitch views as a credit positive. The company's debt leverage as of March 31, 2005 was 50.2% of undepreciated book capital. This leverage measure compares favorably to the company's three-year average of 50.4%. Including preferred stock, debt leverage plus preferred equals 59.1% of undepreciated book. This metric, while down slightly from year-end 2004 levels, is higher than the company's three-year average of 57.2%. Both leverage metrics remain sufficient for the rating category. Additionally, with a 2010 maturity on this bond, BRE was able to further ladder their debt maturity schedule, placing this bond in a year when they previously had $0 of unsecured debt maturing. Excluding the company's line of credit, BRE has just under 4% of its total debt maturing in 2005 and 2006 combined. In 2007, the company has $200 million of unsecured debt maturing, or 15% of total debt (including $14 million of secured debt) as of March 31, 2005. BRE Properties, a real estate investment trust, develops, acquires, and manages apartment communities with a strategy to locate assets convenient to its residents' work, shopping, entertainment, and transit in supply-constrained Western U.S. markets. BRE directly owns and operates 85 apartment communities totaling 24,006 units in California, Arizona, Washington, and Colorado. The company currently has nine other properties in various stages of development and construction, totaling 2,339 units, and joint venture interests in two additional apartment communities, totaling 488 units. As of March 31, 2005, the company's same-store portfolio had average occupancy of 93.8%, with average market rent of $1,125 per unit. The company breaks its investments out into four regions with Southern California contributing 51% (to NOI NOI Net Operating Income NOI Notice of Intent NOI Nation of Islam NOI Notice of Inquiry NOI Neuro Orthopaedic Institute NOI New Organizing Institute NOI Notice of Interest NOI No Offense Intended NOI National Olympiad in Informatics ), Northern California (24%), Mountain/Desert (13%), and Pacific Northwest (12%). More information about BRE Properties, Inc. is available on the Fitch Ratings web site at www.fitchratings.com. |
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