Fitch Ratings has downgraded Centerline Capital Group's (Centerline) commercial real estate collateralized debt obligation (CDO) asset manager (CAM) rating to 'CAM2' from 'CAM1-'.
The downgrade reflects the adverse impact of current market conditions on Centerline's business franchise and financial condition. Centerline has announced a plan to de-lever its balance sheet, which includes repaying $68 million of term debt due by Dec. 31, 2008. The first tranche of this debt, with a balance of approximately $18.8 million, is due on Nov. 21, 2008.
On November 4, 2008, Centerline also announced firm-wide staff reductions of approximately 20%. Fitch believes staffing available to support Centerline's CDO management activities remains at an appropriate level. Fitch will continue to monitor Centerline's financial condition as it relates to the operational capacity of the company's CDO management function.
Centerline's 'CAM2' rating is based on the following category scores:
--Company and Management Experience '3';
--Staffing '2';
--Procedures and Controls '1-';
--Portfolio Management '2+';
--CDO Administration '1-';
--Technology '1-'.
Centerline, a subsidiary of Centerline Holding Company (NYSE: CHC), is a real estate finance and investment company. In April 2007, the company announced its name change to Centerline Capital Group from CharterMac, bringing all of its subsidiaries together to operate under one name and as one company. Several major transactions and the acquisition of ARCap REIT, Inc. in August 2006 transformed the company from a firm focused on affordable and multifamily housing to a full-service real estate finance and investment company.
Fitch rates CDO asset managers, by asset type, on a scale of 1 to 5, with 1 being the highest rating. These ratings are based on a standardised scorecard methodology that includes factors in several rating categories. On Oct. 16, 2008, Fitch published updated CAM rating criteria, which was applied in the context of Fitch's analysis of Centerline. The report, entitled 'Criteria for Reviewing and Rating CDO Asset Managers' is available on the agency's public website, 'fitchratings.com'.
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.