Fitch Ratings Affirms 'BBB' Rating For CenterPoint Properties.

Business Editors

NEW YORK--(BUSINESS WIRE)--April 11, 2002

Fitch has affirmed its senior debt and preferred stock ratings for CenterPoint Properties (NYSE:CNT). Ratings are affirmed at 'BBB' for $350 million senior unsecured notes due 2003-2005 and 'BBB-' for $125 million of perpetual and convertible preferred stock. Fitch's Rating Outlook remains Stable.

CenterPoint is a $1.9 billion (market) REIT that owns and develops industrial properties, primarily in the greater Chicago area. As of year-end 2001, CenterPoint's in-service portfolio consisted of 178 properties totaling 28 million square feet of rentable area.

Fitch's ratings reflect positively on Chicago-based CenterPoint's local market expertise, its focus on larger warehouse properties in in-fill submarkets, and the depth and breadth of investor and tenant demand for Chicago industrial properties. The rating also acknowledges the stable cash flow characteristics for the CenterPoint portfolio, including the historic stability of market rent levels, low expense and capital expenditure requirements, and a low rate of functional obsolescence. While Fitch's analysis gives only indirect benefit to gains from asset sales, CenterPoint's capital recycling efforts are recognized as an important mitigant of funding pressures associated with an active development pipeline. Additional credit strengths include moderate 32% debt leverage (at market)(why at market is this optimistic), good access to debt and equity markets, and good priority of bondholders in the capital structure due to minimal use of mortgage debt.

Fitch's primary ratings concern for CenterPoint is portfolio concentration in the Chicago area, which represents approximately 90% of rentable area. Related risks are partially mitigated by the breadth and depth of the Chicago economy, its importance as a regional transportation hub, and CenterPoint's diversification throughout the region, with no single submarket representing more than 20% of rental income.

A growing concern for the Chicago industrial market is recent weakness in tenant demand relative to new supply. Weaker fundamentals are reflected in higher vacancy rates for the overall market and CenterPoint's in-service portfolio, where occupancy declined to 92.5% as of year end 2001 and was negatively impacted by the bankruptcy of Halo Industries, previously the company's largest tenant representing approximately 6% of EBITDA. While the Chicago industrial market appears well positioned for recovery based on a sharp decline in recent construction starts, the market and CenterPoint could suffer further moderate erosion to occupancy levels throughout 2002. Nevertheless, Fitch believes that risk of significant further occupancy deterioration is more moderate for CenterPoint than its peer group on average, owing to a longer average remaining lease term of 4.8 years and minimal exposure to partially leased, recently completed developments.

CenterPoint's credit profile is somewhat tempered by above average development exposure, with a pipeline that is greater in size and complexity than in previous years and a focus on several large projects that could potentially result in reduced diversification measures. However, related risks are largely mitigated by the close involvement of senior management, a consistently high level of pre-leasing, and the location of projects either in supply-constrained submarkets or immediately adjacent to major transportation infrastructure. Fitch also notes that related funding pressures and long-term investment exposure are significantly reduced by CenterPoint's ability to finance a large component of costs at the project level, from sources that include various government programs and potential ground lease securitization.

CenterPoint has maintained stable financial measures over the past year, a trend that Fitch believes can be sustained throughout 2002 based on an anticipated balance between capital uses and sources. Year-end 2001 debt leverage at 48% of undepreciated book capital and 32% of total market capitalization was unchanged from year-end 2000. Excluding gains on sale and equity income, interest coverage was similarly flat at 3.1 times (x) during 4th-quarter 2001 (2.5x including capitalized interest), as was fixed charge coverage at 2.1x (numerator adjusted for capital expenditures and straight-line rents). Looking forward to 2002, Fitch anticipates that the negative impact to coverage ratios from the Halo bankruptcy will be recovered in part from re-tenanting or sale of the Halo building, and to a greater extent from incremental rents and fees at development completions.

CenterPoint's debt refinancing requirements are high over the next several years, and include $350 million of senior note maturities between January 2003 and April 2005, $50 million of mortgage debt expected to be repaid in November 2002, and potential redemption of $75 million series A preferred stock at that time. CenterPoint's access to debt and equity capital markets is considered good, and refinancing requirements, while not without execution risks, present an opportunity for CenterPoint to significantly extend debt maturities and further increase the company's unencumbered asset base, which currently represents a strong 2.3x total unsecured debt. Financial flexibility is augmented by $219 million of remaining availability (as of year-end 2001) under the company's $350 million unsecured bank credit facility.