S&P gives BBB to Sovran notes

S&P said it assigned its BBB issue-level rating to the proposed senior unsecured notes of Sovran Acquisition LP, a subsidiary of Sovran Self Storage Inc.

The company intends to use proceeds from the notes to partially fund the LifeStorage acquisition and retain excess funds in cash and cash equivalents.

The agency rates the new notes the same as the company’s BBB corporate credit rating.

The the outlook remains stable.

Pro forma for the transaction, S&P expects debt to EBITDA to increase to the high-5 times area in 2016 and trend down to the high-4 times area in 2017 as the LifeStorage acquisition becomes fully integrated.

The agency expects the acquisition will result in meaningful improvement in scale and portfolio quality, even though Sovran's credit protection measures will weaken modestly given the incremental debt associated with the transaction.

S&P said it believes metrics will improve over the next two years as the company integrates LifeStorage and leverages its expenses, while it also improves occupancy at the non-stabilized properties.

© 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.