PrefBlog

Standard and Poor’s has announced:

• •Brookfield Property Partners L.P. completed its acquisition of former affiliate and large office landlord Brookfield Office Properties Inc.
• •Operating fundamentals have improved for office landlords as the U.S. economy has recovered, employment has strengthened, and new office supply additions have been muted.
• •We are affirming our ‘BBB-‘ corporate credit rating on Brookfield Office and removing all ratings from CreditWatch with developing implications. The outlook is stable.
• •The stable outlook reflects our view that the company’s competitively positioned office portfolio, with improving occupancy, good quality tenants, and below market rents will support leverage and fixed-charge coverage at current levels.

Standard & Poor’s Ratings Services today affirmed its ‘BBB-‘ corporate credit rating on Brookfield Office Properties Inc. (Brookfield Office), ‘BB+’ rating on the company’s unsecured debt, and ‘BB’ rating on its preferred stock. We removed all ratings on the company from CreditWatch, where we placed them with developing implications on Oct. 4, 2013. These actions affect roughly $1.7 billion of rated corporate debt and preferred securities.
…
We would lower ratings if leverage rises to 60%, fixed-charge coverage measures deteriorate to the 1.3x level, or the common dividend is not adequately supported by operations, since these measures would be more reflective of an “aggressive” financial risk profile. An increase in speculative development activity would also pressure ratings.

We don’t see potential for upgrade momentum over the next few years despite the company’s “strong” business risk profile until the financial risk profile is more firmly positioned within the “significant” category. Specifically, we would look for fixed-charge coverage measures above 1.7x, debt to EBITDA of less than 10x, and stronger coverage of the common dividend. The prudent pursuit and financing of the company’s expanding development pipeline would also be an important consideration for ratings improvement.

The “Watch – Developing” status was previously reported on PrefBlog.

The ultimate parent, Brookfield Asset Management, has the following preferred shares outstanding:
FixedResets BAM.PF.A, BAM.PF.B, BAM.PF.E, BAM.PF.F, BAM.PR.R, BAM.PR.T, BAM.PR.X, BAM.PR.Z
Floaters BAM.PR.B, BAM.PR.C, BAM.PR.K
RatchetRate BAM.PR.E
FixedFloater BAM.PR.G
OperatingRetractible BAM.PR.J
Straight Perpetual BAM.PR.M, BAM.PR.N, BAM.PF.C, BAM.PF.D

BPO has the following preferred share issues outstanding:
OperatingRetractible BPO.PR.H, BPO.PR.J, BPO.PR.K,
FixedReset BPO.PR.L, BPO.PR.N, BPO.PR.P, BPO.PR.R, BPO.PR.T,
Floaters BPO.PR.W, BPO.PR.X, BPO.PR.Y

In addition, there are the following split shares dependent upon BPO:
BPS.PR.U, BPS.PR.A, BPS.PR.B and BPS.PR.C

This entry was posted on Tuesday, September 30th, 2014 at 6:16 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.