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December 21, 2007 |
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CENTRO NP: Fitch Junks Issuer Default Rating Fitch Ratings has downgraded the ratings for Centro NP LLC (formerly New Plan Excel Realty Trust): -- Issuer Default Rating (IDR) to 'CCC' from 'BBB+'; -- US$350 million revolving bank credit facility to 'CC/RR6' from 'BBB+'; -- US$830 million senior unsecured notes to 'CC/RR6' from 'BBB+'. Centro NP LLC remains on Rating Watch Negative by Fitch. Fitch has withdrawn its New Plan Excel Realty Trust preferred stock rating as these securities were redeemed in connection with the acquisition of New Plan by affiliates of Centro Property Group. The downgrade of Centro NP LLC ratings is due to the financial difficulties of the entity's Australian based parent company Centro Property Group (CNP) in connection with the refinancing of over US$2.3 billion of indebtedness due to dislocations in the credit markets. CNP has negotiated an extension on its maturing facilities to Feb. 15, 2008; however, given the current state of the credit markets, there is a great deal of uncertainty surrounding CNP's ability to refinance this indebtedness. Centro NP bondholders are protected by several financial covenants in its bond indentures including total debt to total historical book assets less than 65%; debt service coverage ratio greater than 1.5 times (x); secured debt to total historical book assets under 40% and unencumbered historical book assets to unsecured debt greater than 1.0x. However, Fitch is concerned that Centro NP assets could be consolidated in a CNP liquidation scenario and the covenants waived. The ratings concerns center on CNP liquidity issues and do not pertain to the operating performance of Centro NP. The portfolio of needs-based, grocery-anchored shopping centers across the U.S. is performing well and expected to be well positioned in an economic slowdown. The strong geographic and tenant diversity of the portfolio helps insulate the company from regional downturns or tenant credit deterioration. Furthermore the company has seasoned executive and regional management teams and a strong regional infrastructure. Fitch expects the Rating Watch Negative will be resolved once there is more clarity regarding CNP's financial stability. Centro NP is a US$5.9 billion total assets real estate company focusing on the ownership, management and development of community and neighborhood shopping centers. Centro NP operates a national portfolio of community and neighborhood shopping centers across the U.S. with approximately 67 million square feet of GLA. Centro Properties Group is a Melbourne-based company (ASX: CNP) focusing on the ownership, management, and development of retail shopping centers. Centro has AU$26.6 billion of retail property assets. Fitch's Recovery Ratings (RR) are a relative indicator of creditor recovery prospects on a given obligation within an issuers' capital structure in the event of a default. About Centro Properties Centro Properties Group -- http://www.centro.com.au/ -- is an Australia-based company that comprises the operations of Centro Property Trust (the Trust) and its entities, which are engaged in property investment, property management, property development and funds management. The Company operates in two business segments: property ownership business and services business. The Company derives income from retail property rentals of shopping center space to retailers across Australasia and the United States. It also derives income from its retail property investments in listed and unlisted entities. Its services business activities include incorporating funds management, property management and development and leasing. During the fiscal year ended June 30, 2007, the Company acquired New Plan Excel Realty Trust (New Plan), Heritage Property Investment Trust (Heritage) and Galileo Funds Management, as well as assumed full ownership of its United States management operations. |
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