Fitch Ratings has placed CarrAmerica on Rating Watch
Negative following the company's announcement that it was being
acquired by The Blackstone Group (Blackstone). Fitch rates CarrAmerica
as follows:
-- Senior unsecured debt 'BBB';
-- Preferred stock 'BBB-'.
The Negative Rating Watch takes into account CarrAmerica's announcement that it will give up access to the public equity capital markets. While Fitch has limited information available to indicate what CarrAmerica's balance sheet and operating strategy will be after the transaction closes, the Negative Rating Watch also considers that the leverage and funding strategy of the company after the transaction closes may be more aggressive than it has been historically.
CarrAmerica's 'BBB' senior unsecured rating has historically been supported by the company's large pool of unencumbered assets. Currently, CarrAmerica has roughly $3 billion in unencumbered assets and Fitch calculates the company's unencumbered asset coverage to be 1.81 times (x) at Dec. 31, 2005. Fitch notes that while Blackstone may seek to increase CarrAmerica's leverage, unsecured bondholders are currently protected with the industry standard covenant package of total debt less than 60% of total assets, secured debt less than 40% of total assets, EBITDA interest coverage greater than 1.5x and unencumbered assets greater than 150%. Therefore, Blackstone may elect to call the existing unsecured bonds to avoid these covenants. CarrAmerica has publicly noted that Blackstone plans to buy out the existing Series E preferred stock holders.
CarrAmerica is a self-administered and self-managed equity real estate investment trust (REIT) headquartered in Washington D.C. that specializes in owning, acquiring, developing, and operating office properties. As of Dec. 31, 2005, CarrAmerica had interests in 26.3 million square feet of office space in 12 markets across the U.S. As of the year-end 2005, the company had approximately $3.7 billion of undepreciated book capital.
Fitch's rating definitions and the terms of use 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 are also available from the 'Code of Conduct' section of this site.
-- Senior unsecured debt 'BBB';
-- Preferred stock 'BBB-'.
The Negative Rating Watch takes into account CarrAmerica's announcement that it will give up access to the public equity capital markets. While Fitch has limited information available to indicate what CarrAmerica's balance sheet and operating strategy will be after the transaction closes, the Negative Rating Watch also considers that the leverage and funding strategy of the company after the transaction closes may be more aggressive than it has been historically.
CarrAmerica's 'BBB' senior unsecured rating has historically been supported by the company's large pool of unencumbered assets. Currently, CarrAmerica has roughly $3 billion in unencumbered assets and Fitch calculates the company's unencumbered asset coverage to be 1.81 times (x) at Dec. 31, 2005. Fitch notes that while Blackstone may seek to increase CarrAmerica's leverage, unsecured bondholders are currently protected with the industry standard covenant package of total debt less than 60% of total assets, secured debt less than 40% of total assets, EBITDA interest coverage greater than 1.5x and unencumbered assets greater than 150%. Therefore, Blackstone may elect to call the existing unsecured bonds to avoid these covenants. CarrAmerica has publicly noted that Blackstone plans to buy out the existing Series E preferred stock holders.
CarrAmerica is a self-administered and self-managed equity real estate investment trust (REIT) headquartered in Washington D.C. that specializes in owning, acquiring, developing, and operating office properties. As of Dec. 31, 2005, CarrAmerica had interests in 26.3 million square feet of office space in 12 markets across the U.S. As of the year-end 2005, the company had approximately $3.7 billion of undepreciated book capital.
Fitch's rating definitions and the terms of use 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 are also available from the 'Code of Conduct' section of this site.