Sep. 22, 2009 (Business Wire) -- Fitch Ratings has assigned a 'BB+' rating to the new $250 million 7.5% senior unsecured notes due May 15, 2015 issued by Brandywine Operating Partnership, L.P. Brandywine Operating Partnership, L.P. is the operating partnership of Brandywine Realty Trust (NYSE: BDN). Proceeds from the offering will be used to repay existing indebtedness under the company's unsecured revolving credit facility and for general corporate purposes. The Rating Outlook is Stable.
The ratings reflect the fact that the company's credit metrics are solid for the 'BB+' rating. As of June 30, 2009, the company's debt to the last 12 months recurring operating earnings before interest, taxes, depreciation, and amortization (EBITDA) was 7.5 times (x) as compared to 8.1x on Dec. 31, 2008. Additionally, Brandywine's fixed-charge coverage (defined as recurring EBITDA less capital expenditures and straight-line rent adjustments, divided by interest expense, capitalized interest, and preferred stock dividends) was 1.7x for each of the 12 months ended June 30, 2009 and Dec. 31, 2008.
While Brandywine raised funds in the second quarter through encumbering an additional asset, Fitch estimates the company's book value of unencumbered real estate operating assets to unsecured debt ratio improved to 1.8x on June 30, 2009 from 1.7x on Dec. 31, 2008. Additionally, Brandywine is sufficiently capitalized for the 'BB' rating category with a risk-adjusted capital ratio of 1.0x as of June 30, 2009, improved from 0.9x as of Dec. 31, 2008.
Finally, Brandywine's liquidity position will improve with this bond issuance. In the Sept. 11, 2009 special report 'U.S. Equity REIT Liquidity Update: Slowly on the Mend', Fitch calculated that as of/for the six months ended June 30, 2009 through Dec. 31, 2011, Brandywine had a liquidity shortfall of $130.5 million. Pro forma for the proceeds from this bond offering, Fitch calculates that Brandywine has a liquidity surplus of approximately $120 million.
Please refer to the full rating report 'Brandywine Realty Trust (Brandywine Operating Partnership, L.P.)', dated Sept. 1, 2009, or the press release 'Fitch Affirms Brandywine Realty Trust's IDR at 'BB+'; Outlook to Stable', dated Aug. 11, 2009, and available on the Fitch web site at 'www'fitchratings.com' for further details.
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