S&P cuts Lion Gables, rates loans BB+

Standard & Poor's said it lowered its corporate credit and senior unsecured and preferred stock ratings on Lion Gables Residential Trust, formerly Gables Residential Trust, and various related entities.

Ratings lowered include corporate credit to BB/stable/-- from BBB/Watch negative, senior unsecured to B+ from BBB/Watch negative and preferred stock to B from BBB-/Watch negative.

At the same time, a BB+ rating and 1 recovery rating were assigned to Lion Gables' $1.9 billion senior secured term loan and $300 million senior secured revolving credit facility.

The outlook is stable.

The downgrades reflect a post-closing capital structure from a June merger that is more highly leveraged and comprises a significantly higher level of secured debt, which substantially encumbers the portfolio, S&P said.

Another rating consideration is the expectation that Lion Gables, after asset sales, will operate an even smaller and somewhat more concentrated portfolio, while also maintaining a sizable development program, S&P said.

Mitigating these concerns are the strong quality of the portfolio and the generally good performance within its markets, S&P said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.