Fitch rates EastGroup Properties
Published: October 29,2009
JACKSON — Fitch Ratings has affirmed EastGroup Properties Inc.’s (EGP’s) ratings as follows:
• Issuer Default Rating (IDR) at “BBB”
• Unsecured lines of credit at “BBB”
• Preferred stock (indicative) at “BBB-’”
The Rating Outlook is “stable.”
Fitch wrote: “The affirmations center on the strength of EGP’s credit metrics as illustrated by solid debt service coverage, adequate liquidity, moderate leverage and its high-quality portfolio of properties and investments throughout the major Sunbelt markets within the states of Florida, Texas, Arizona and California. The ratings also reflect EastGroup’s solid risk-adjusted capitalization at 1.1 times (x), and strong unencumbered asset coverage of unsecured debt, which is strong at 5.8x on an undepreciated book value basis at June 30, 2009.
Further support for the ratings is provided by EGP’s liquidity position and manageable debt maturity schedule. EGP’s $138 million of availability under its credit facilities is the main driver of EGP’s Fitch estimated liquidity surplus through Dec. 31, 2011. In addition, EGP’s manageable debt maturity schedule and strong unencumbered asset to unsecured debt coverage provides additional financial flexibility and limits refinance risk over the next two years. Fitch also acknowledges EGP’s limited development exposure, although lease-up risk remains.
“The ratings also point to the strength of EGP’s management team, including senior officers as well as property managers.
“In addition, the financial covenants in the company’s unsecured debt agreements do not limit EGP’s financial flexibility.
“Fitch’s credit concerns revolve around EGP’s relatively small size, the geographic concentration of its portfolio, moderate lease rollover and the recessionary economy and its impact on property fundamentals within the industrial sector. EGP’s decline in same-property NOI was -2.6 percent for the quarter ended June 30, 2009, when compared to the same quarter in the prior year. Additionally, portfolio occupancy has declined to 91.2 percent in the second quarter of 2009 (2Q’09) compared to 92.8 percent in 1Q’09, and 95 percent in 2Q’08, respectively.”
To sign up for Mississippi Business Daily Updates, click here.
FOLLOW THE MBJ ON TWITTERMy Tweets
Top Posts & Pages
- UMMC reaching out after death of high school football player
- Former Godwin CEO Danny Mitchell dies at 66
- Northrop Grumman lands $354M Air Force contract for Global Hawks
- MDOT: Work on I-269 is on schedule, several phases at halfway point
- More school districts join MAEP lawsuit brought by Musgrove
- Thousands of acres of Delta farmland to go on auction block
- Court tosses challenge to Miss. Silicon’s clean air permit
- S&P: State in top 10 in U.S. in sales tax dependency
- Biloxi baseball project still alive but may be held for 2015