Fitch upgrades ProLogis

Fitch Ratings said it upgraded ProLogis' issuer default rating, $2.3 billion global line of credit, $4.7 billion senior notes and $1.8 billion convertible senior notes to BB+ from BB and its $350 million preferred stock to BB- from B+.

The outlook was revised to stable from negative.

The agency said the upgrade is due to significant expected reductions in the company's leverage. Proceeds from the company's recently priced follow-on common equity offering and the sale of industrial properties and other assets to affiliates of Blackstone Real Estate Advisors will be used to reduce borrowings under its line of credit, address a senior note maturity in November and tender for longer-dated senior notes. Over the next 12 months, Fitch estimates that ProLogis' net debt-to-recurring operating EBITDA ratio will approach 9 times, compared with 12.2 times as of Sept. 30.

The outlook revision reflects ProLogis' high-quality unencumbered industrial property portfolio that provides value to bondholders, its good liquidity position, staggered debt maturity schedule and management's focus on strengthening the balance sheet, Fitch said.

Credit concerns revolve around Fitch's view that ProLogis' ability to continue monetizing its significant land holdings remains vulnerable to execution risk due to the fragile economic recovery.

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