Fitch Upgrades Liberty Property Trust's IDR to 'BBB+'; Outlook Stable.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 upgraded its senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. rating of Liberty Property Limited Partnership (LPLP LPLP Libertarian Party of La Porte (Indiana) LPLP Layered Packet-Loss Protection ), the principal operating subsidiary of Liberty Property Trust (NYSE NYSE See: New York Stock Exchange :LRY LRY Liberal Religious Youth (Unitarian Universalist church; now Young Religious Unitarian Universalists) ) to 'BBB+'. Likewise, Fitch has also upgraded its 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. ) to 'BBB+' and its indicative rating on Liberty's preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. to 'BBB'. The Rating Outlook is stable. The ratings upgrade reflect Liberty's careful balance sheet management and ability to continue to produce growing operating earnings throughout varying economic cycles. The company has demonstrated a strong degree of financial flexibility through access to the unsecured debt market, relatively comfortable leverage levels, a high percentage of unencumbered properties, substantial availability from its credit facility and a reasonably manageable debt maturity schedule. Liberty is fairly well-balanced with regard to geography and asset concentration with exposure to two separate property types (53% office, 47% industrial) located in 18 different markets. In addition, based on Liberty's positive same-store net operating income growth for three consecutive quarters, it appears that the company is past the trough with regard to office demand and operating performance for the company's core markets, which had been slow to recover after the recent economic downturn. The company also has a manageable lease expiration schedule, with approximately 11% of leases expiring on average over the next five years. Moreover, the tenant roster is very diverse with limited industry and company concentration as the top 10 office tenants comprise only 14% of 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. base rents, while the top 10 industrial tenants comprise only 7% of annualized base rents. The ratings are balanced by Liberty's geographic concentration in the Eastern Pennsylvania/New Jersey region, which accounts for approximately 44% of annualized base rent and relatively low barriers to entry in predominantly suburban submarkets. In addition, LRY's construction of its large downtown Philadelphia 1.3 million square foot office tower (Comcast Center) presents additional concerns with regard to considerable development, lease-up and concentration risk as the project has a proposed cost of $472 million, or over 10% of total assets. However, the building is already 78% pre-leased more than a year before expected opening (about 70% to Comcast Corp.) and Liberty has formed a joint venture with a unit of Commerzbank AG where LRY will retain a 20% stake in the property upon completion. These events have served to somewhat mitigate these risks. When taken together with the rest of its pipeline, development projects still currently comprise approximately 12% of Liberty's total assets outstanding after accounting for the partnership aspect of the Comcast Center. This is higher than the company's development to total assets average of 6.7% for the previous eight years, so it is an aspect Fitch will continue to closely monitor prospectively. Interest coverage and fixed charge coverage ratios of 3.5 times (x) and 2.6x, respectively, are strong in comparison with similarly rated real estate investment trusts (REITs). Debt leverage stood at 44.1% of undepreciated book capitalization at the end of third quarter of 2006, which is in line with comparably rated REITs. As of December 31, 2005, the company also had a solid unencumbered asset coverage of unsecured debt of 2.45x. Liberty Property Trust, headquartered in Malvern, PA, is a $5.2 billion (total undepreciated book capital as of Sept. 30, 2006) owner, manager and developer of suburban office and industrial properties located predominantly throughout the Mid-Atlantic, Southeastern and Mid-Western states. The portfolio consists of approximately 65 million square feet and includes more than 700 properties. 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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