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Thu, October 7, 2010 Fitch Rates SL Green Operating Partnership's $300MM Exchangeable Sr Notes 'BB+'; Outlook Stable
NEW YORK--([ BUSINESS WIRE ])--Fitch Ratings has assigned a 'BB+' rating to the $300 million aggregate principal amount of 3% exchangeable senior notes due 2017 issued by SL Green Operating Partnership, a subsidiary of SL Green Realty Corp. (NYSE: SLG). The transaction is expected to close Oct. 12, 2010, subject to customary closing conditions.
Net proceeds from the offering of the notes are expected to be approximately $292.5 million. The proceeds are expected to be used for investment opportunities and repayment of the outstanding indebtedness of SLG's subsidiaries, with any additional proceeds to be used for general corporate purposes.
SL Green Realty Corp's (SLG) 'BB+' Issuer Default Rating (IDR) is based on its solid liquidity position, consistent portfolio performance of office assets and the strength of SLG's management team, as it maintained solid occupancy and liquidity throughout the downturn. The ratings also reflect the company's consistent leverage, measured as net debt to recurring operating EBITDA, and fixed-charge coverage ratio (defined as recurring operating EBITDA less capital expenditures and straight-line rents, divided by interest incurred and preferred stock distributions).
Balancing these strengths are SLG's potential future capital requirements, including debt repayment and investment capital, which could cause potential challenges in the event that capital markets access becomes more difficult. These challenges could include the inability to refinance maturing mortgages at face value. Additional concerns include relatively weak office property fundamentals in SLG's markets, which may negatively impact the earnings power of the company's portfolio, as well as the geographic concentration of SLG's portfolio of office properties in Metro New York City and SLG's exposure to financial services tenants.
For additional information, please refer to Fitch's Feb. 4, 2010 press release, 'Fitch Affirms SL Green Realty Corp.'s IDR at 'BB+'; Outlook Revised to Stable' available at '[ www.fitchratings.com ]'.
SL Green is a self-administered and self-managed real estate investment trust that predominantly acquires, owns, repositions and manages Manhattan and suburban office properties. On a consolidated basis as of June 30, 2010, the Company owned interests in 30 New York City office properties totaling approximately 22,012,215 square feet and 31 suburban assets totaling 6,804,700 square feet. SL Green also held investment interests in eight retail properties, three development properties, and two land interests. SL Green had $10.4 billion in total book assets and $4.7 billion in total shareholders' equity as of June 30, 2010.
Additional information is available at '[ www.fitchratings.com ]'.
Applicable Criteria and Related Research:
--'Corporate Rating Methodology', Aug. 16, 2010;
--'Parent and Subsidiary Rating Linkage', July 14, 2010;
--'Criteria for Rating U.S. Equity REITs and REOCs', April 16, 2010;
--'Equity Credit for Hybrids & Other Capital Securities - Amended', Dec. 29, 2009;
--'Rating Hybrid Securities', Dec. 29, 2009;
--'Recovery Rating and Notching Criteria for REITs', Dec. 23, 2009.
Applicable Criteria and Related Research:
Corporate Rating Methodology
[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=546646 ]
Parent and Subsidiary Rating Linkage Criteria Report
[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=534826 ]
Criteria for Rating U.S. Equity REITs and REOCs
[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=510465 ]
Equity Credit for Hybrids & Other Capital Securities - Amended
[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=493112 ]
Rating Hybrid Securities
[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=493086 ]
Recovery Rating and Notching Criteria for REITs
[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=492828 ]
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: [ HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS ]. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE '[ 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.
