NEW YORK, NY—Colonial Properties Trust, one of the largest multifamily and office developers in the nation, received some good news and some not-so-good news in the mail today.
Birmingham, AL-based Colonial Properties Trust and CLP, its operating partnership, have received passing grades from Fitch Ratings on $100 million of their preferred stock offerings but had over $2 billion in unsecured notes and an unsecured line of credit downgraded to negative from stable.
Birmingham, AL-based Colonial Properties Trust and CLP, its operating partnership, have received passing grades from Fitch Ratings on $100 million of their preferred stock offerings but had over $2 billion in unsecured notes and an unsecured line of credit downgraded to negative from stable.
(Colonial Pinnacle at Craft Farms apartments, Gulf Shores, AL, top right photo)
“The negative rating outlook stems from Fitch’s view that difficult property fundamentals in CLP’s markets, including Charleston, Savannah, Austin and Orlando, will weaken Colonial’s earnings power over a longer timeframe.”
“The negative rating outlook stems from Fitch’s view that difficult property fundamentals in CLP’s markets, including Charleston, Savannah, Austin and Orlando, will weaken Colonial’s earnings power over a longer timeframe.”
Fitch gave Colonial Properties Trust a BBB- issuer default rating and a BB+ on its preferred stock.CLP also received a BBB- issuer default rating and a BB+ on $100 million of preferred stock, but had to settle for a BBB- on $1.3 billion of senior unsecured notes, $675 million on an unsecured line of credit, and $45 million of senior unsecured medium-term notes.
(Colonial Village at Oak Bend apartments, Lewisdale, TX, middle left photo)
Still, the analysts had some encouraging words for Colonial’s management program. They gave the REIT the BB+ rating on the preferred stock because of the company’s “manageable debt maturity schedule and good liquidity position,” recently bolstered by a $350 million secured debt transaction with Fannie Mae. 
“The rating affirmation further underscores prudent steps that Colonial has taken to strengthen its balance sheet and improve liquidity, through unsecured debt repurchases, declines in overhead costs and reductions in common stock dividends,” according to the analysts.
“The rating affirmation further underscores prudent steps that Colonial has taken to strengthen its balance sheet and improve liquidity, through unsecured debt repurchases, declines in overhead costs and reductions in common stock dividends,” according to the analysts.
(The Landings apartments, Huntersville, NC, bottom right photo)
They also say “Fitch views favorably CLP’s reduction in planned development spending in 2009.”
As of Dec. 31, 2008, CLP, the direct general partner of Colonial Properties Trust had $3.6 billion in undepreciated book assets, $1.4 billion in undepreciated book equity, and a total market capitalization of $2.9 billion.
They also say “Fitch views favorably CLP’s reduction in planned development spending in 2009.”
As of Dec. 31, 2008, CLP, the direct general partner of Colonial Properties Trust had $3.6 billion in undepreciated book assets, $1.4 billion in undepreciated book equity, and a total market capitalization of $2.9 billion.
