Moody's rates Ginn-LA CS loans B1, B2

Moody's Investors Service said it assigned a B2 corporate family rating to Ginn-LA CS Holding Co. LLC and its co-borrower Ginn-LA Conduit Lender Inc., a B1 to the companies' proposed $165 million first-lien senior secured synthetic revolver due 2011, a B1 to the proposed $385 million first-lien senior secured term loan due 2011 and a B2 to the proposed $125 million second-lien senior secured term loan due 2012. The outlook is stable.

The agency said the ratings reflect the relatively early stage in the development of three of the company's five housing development projects, the presumed non-investment grade sponsorship/ownership of the projects, the fact that most of the future lot sales are not yet under contract, the substantial dividend being paid out as part of this transaction, the geographic concentration in the projects (three in Florida) and the cyclical nature of the land development business.

At the same time, the ratings acknowledge the significant collateral in the structure (as represented by a Cushman & Wakefield appraisal of $1.495 billion), the reasonably strong early track record of two of the five projects, the sponsor/owner's success in other high end and vacation home projects, the considerable infrastructure spending completed to date and the fact that the projects in the aggregate become free cash flow positive this year, if projections about future lot sales continue to be realized, Moody's said.

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