Business Editors
TORONTO--(BUSINESS WIRE)--Standard & Poor's
April 3, 2002-- Standard & Poor's today ralph lauren polos said it assigned its triple-'B'-plus rating to Morguard Real Estate Investment Trust's C$55 million 6.76% series D first mortgage bond maturing in 2006.
At the same time, Standard & Poor's affirmed its double-'B'-plus corporate credit rating on the company, and its triple-'B'-plus rating on Morguard's first mortgage bonds and its triple-'B'-minus rating on the company's second mortgage bond. The outlook is stable.
The new issue is a refinancing of the C$55 million series A 6.85% bond that matured March 28, 2002, and was secured by St. Laurent Shopping Centre. The new issue also will be secured with a first mortgage charge on the property. Morguard has another two first mortgage bonds that are secured by this asset (C$55 million and C$25 million maturing in March 2007 and June 2010, respectively). The St. Laurent Shopping Centre is a 946,000 square-foot enclosed regional mall with 220 stores and a Pearl Jewelry freestanding six-story office building. The property is a dominant mall in its market area and is a strong performer with total occupancy of 97% and sales per square foot of the in-line tenants of about C$580.
The corporate credit rating assigned to Morguard reflects the good competitive position of some of the company's more dominant assets, a management team experienced in the operation and development of commercial properties, a longer average debt tenor, a largely fixed-rate debt structure, and a moderate financial position. Offsetting these credit strengths are the portfolio's small size, the company's heavy dependence on the performance of five properties, its significant near-term lease maturities for the industrial and office properties, and the company's limited financial soccer jersey wholesale flexibility. In addition, Morguard is a young company, established four years ago.
Morguard is a midsize Canadian company with a portfolio of retail, office, and industrial properties totaling about nine million square feet. The company has five key retail properties, each with notable local market strength (St. Laurent Shopping Centre in Ottawa, Ont.; The Centre at Circle and 8th in Saskatoon, Sask.; Cambridge Centre in Cambridge, Ont.; Red Deer Centre in Red Deer, Alta.; and Shoppers Mall in Brandon, Man.).
Morguard's financial position is appropriate for the rating. The capital structure is moderately leveraged at 57% debt-to-book capitalization and the average debt tenor of about seven years matches well with tenant lease terms that are typically between five and 10 years. Debt service coverage of roughly 1.7 times is supported by a largely fixed-rate debt structure.
OUTLOOK: STABLE
box printing Morguard's portfolio is well diversified by product type and tenant, which should somewhat mitigate the effect of any softening of the North American economy. The trust's moderately leveraged capital structure, reasonable debt maturities, and largely fixed-rate debt schedule also should provide a degree of stability to the company's cash flow.
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