Fitch Upgr Krauss/Schwartz Properties Ltd. -- IV -ProLogis IV-.Business Editors NEW YORK--(BUSINESS WIRE)--Dec. 21, 2001 Krauss/Schwartz Properties Ltd. IV, now known as ProLogis Limited Partnership -- IV, $15.1 million Class A is upgraded to 'AAA' from 'AA', and the $7.7 million Class B is upgraded to 'AA' from 'BBB-'. The ratings upgrades follow Fitch's annual review of the transaction, which closed in July 1993. The Notes are secured by two classes; Class A, or the First Priority Notes, with a 7.74% interest rate based on a 20 amortization schedule, and Class B, or the Second Priority Notes, with a 9.94% interest rate based on a 25 year amortization schedule. Class B is fully subordinate to Class A. The Notes have paid down approximately 64% since issuance, to $22.8 million from $63.7 million. The borrower is a wholly-owned subsidiary of ProLogis Trust, a REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). currently rated investment grade by Fitch. The ratings upgrades are due to improved performance of the underlying properties and the amortization of the two Notes. The collateral consists of 37 industrial properties located mostly in the Tampa, Florida “Tampa” redirects here. For other uses, see Tampa (disambiguation). Tampa is a United States city in Hillsborough County, on the west coast of Florida. It serves as the county seat for Hillsborough County.GR6. area (69%), Ohio (17%), and other areas of Florida (14%). The overall performance of the pool has improved since issuance. The year-end 2000 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 (DSCR DSCR See: Debt-service coverage ratio ) has increased to 2.59x from 1.32x at issuance. The DSCR is based on a stressed cash flow (CF) accounting for capital expenditures and a stabilized rental income, the current debt and a debt constant of 10.50%. Of concern was a discrepancy between the borrower's reported year-end 2000 income and the stated rent roll income. However, using the more conservative income as stated on the rent roll, the DSCR derived from this stressed cash flow was still sufficient to warrant the upgrades. In addition, the DSCR using the income from 11 months of rent roll statements ending November 2001 annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. was 2.58x. The loan-to-value (LTV LTV See: Loan-to-value ratio ) has also improved to 36.4% using the stressed year-end 2000 cash flow and a capitalization rate Capitalization Rate According to the Appraisal Institute, it is a method used to convert an estimate of a single year's income expectancy into an indication of value in one direct step, by dividing the income estimate by an appropriate rate. of 9.6%. The LTV at issuance was 56.8%. The improved performance indicators and the amortization of the Notes merit the upgrades. Fitch will continue to monitor the transaction, as surveillance is ongoing. |
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