CarrAmerica Realty Rtgs Afmd Post Nt Issue; Otlk Stbl.
NEW YORK--(BUSINESS WIRE)--Standard & Poor's
Jan. 9, 2002-- Standard & Poor's today affirmed its triple-'B' corporate credit rating on CarrAmerica Realty Corp. and CarrAmerica Realty L.P. In addition, ratings on the company's existing senior unsecured debt and preferred stock are affirmed at triple-'B' and triple-'B'-minus, respectively. The outlook remains stable.
The affirmations follow the announcement today that CarrAmerica has issued $400 million of senior unsecured notes. The proceeds of the notes, which mature in 2012, will be used to reduce amounts outstanding under the company's $500 million unsecured line of credit. In November 2001 CarrAmerica used its line of credit to complete the repurchase of 9.2 million shares of its common stock from Security Capital Group (triple-'B'/CreditWatch Positive) on a leveraged basis. While this new debt issuance does not positively impact debt leverage (about 50% debt-to-book capitalization) it does fix interest rates and appropriately lengthens the company's debt tenor. Coverage is expected to remain at about 2.2 times fixed charges, which is sufficient for the current rating. In order to manage higher debt levels, the company has reduced its targeted average acquisitions for 2002 to about $100 million from about $212 million.
Washington, D.C.-based CarrAmerica is an office REIT with a current equity market capitalization of $1.9 billion and a portfolio of 288 properties comprising 24 million square feet.
Tolerance for higher leverage does indicate a more aggressive financial policy in the near term. However, the company's ratings remain supported by a property portfolio that appears well positioned, with strong average occupancies and a weighted average rental rate that still appears to be modestly below market. While the value of the company's remaining investment in HQ Global Workplaces Inc. has weakened considerably, it is relatively modest at $42 million, and CarrAmerica, to date, has not recognized any income from regarding this investment.
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|Date:||Jan 9, 2002|
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