Oct. 27, 2009 (Business Wire) -- Fitch Ratings has assigned a 'BBB' rating to ProLogis’ $600 million par value senior unsecured notes, with a coupon rate of 7.375%. The notes, which mature on October 30, 2019, were priced at 99.728% of the principal amount to yield 7.414%. The proceeds of the offering will be used to refinance near-term debt maturities and for general corporate purposes. The Outlook on the Issuer Default Rating (IDR) is Negative.
Fitch currently rates ProLogis (NYSE: PLD) as follows:
-–IDR of 'BBB';
–-Global line of credit 'BBB' (the global line has a current commitment size of $3.8 billion, was recently extended to October 2012, and will have a commitment size of $2.25 billion after October 2010);
-–$3.7 billion senior notes 'BBB';
–-$2.2 billion convertible senior notes 'BBB';
–-$350 million preferred stock 'BBB-'.
The ratings reflect ProLogis’ strong liquidity profile, large and global unencumbered industrial property pool, the stabilization of core portfolio occupancy in recent months, and reduced development risk. Credit concerns include an increase in leverage measured as net debt to operating EBITDA, which is driven by reduced same-store net operating income, the weakened earnings power of the company given the impact of the recession on industrial property fundamentals and the reduction in corporate distribution facilities services (CDFS) revenue, and remaining lease-up risk associated with its development properties, which is mitigated somewhat by lease-up activity to date.
ProLogis’ sources of liquidity (cash pro forma for the unsecured bond issuance, availability under the unsecured global line of credit pro forma for the reduced commitment size, expected retained cash flows from operating activities) less uses of liquidity (consolidated and pro rata share of unconsolidated debt maturities and expected recurring capital expenditures) result in a liquidity surplus of approximately $880 million for Sept. 30, 2009 through Dec. 31, 2011. Under this base case pro forma for the unsecured bond issuance, Fitch calculates that ProLogis has a liquidity coverage ratio of 1.5 times (x) for this period assuming no additional asset sales or capital raises. In the event that 80% of the company’s secured debt maturities are refinanced, liquidity coverage would be 3.0x. ProLogis has also improved liquidity throughout the year by generating $1.2 billion of asset sales and property contributions through Sept. 30, 2009. In addition, ProLogis continued to access the capital markets to improve liquidity in the third quarter of 2009 (3Q’09), raising net proceeds of $325 million through at-the-market equity issuances and also raising $350 million in a 7.625% coupon unsecured bond offering priced to yield 7.75%.
The ratings further reflect ProLogis’ $12.6 billion unencumbered property pool, which covered unsecured debt by 2.5x as of Sept.
