Approximately $6.4 bn of securities affected.
New York, March 21, 2011 -- Moody's Investors Service assigned a B1 senior secured rating to
iStar's senior secured facility Tranche A-1 and a B2 senior
secured rating to iStar's senior secured facility Tranche A-2.
Moody's also assigned a corporate family rating of B3 to iStar.
Additionally, Moody's upgraded iStar's senior unsecured
debt to Caa1 from Ca, and preferred stock to Caa3 from C.
This rating action follows the announcement that iStar closed on its $2.95
bn senior secured facility. This concludes Moody's review.
RATINGS RATIONALE
On March 17, 2011, iStar announced that it has entered into
a new $2.95 billion senior secured credit agreement providing
for two tranches of term loans: a $1.50 billion A-1
tranche due June 28, 2013, which bears interest at a rate
of LIBOR plus 3.75%, and a $1.45 billion
A-2 tranche due June 30, 2014, which bears interest
at a rate of LIBOR plus 5.75%. Both tranches include
a LIBOR floor of 1.25%.
As previously outlined to Moody's, the proceeds from the new
financing will be used to refinance iStar's existing secured bank facilities
due in June 2011 and 2012, to repay a portion of iStar's unsecured
debt maturing in 2011 and for other corporate purposes. Outstanding
borrowings under the new financing will be collateralized by a first lien
on a fixed pool of approximately $3.69 billion of assets
consisting primarily of performing loans and CTLs. The financing
provides for minimum cumulative amortization requirements on the A-1
tranche as follows: $200.0 million by December 30,
2011, $450.0 million by June 30, 2012,
$750.0 million by December 31, 2012 and $1.50
billion by June 28, 2013. The A-2 tranche will begin
amortizing after the repayment in full of the A-1 tranche,
with minimum cumulative amortization payments of $150.0
million due six months after payment in full of the A-1 tranche,
and additional payments of $150 million due by each six month anniversary
thereafter until maturity. The new credit agreement contains a
covenant to maintain collateral coverage of not less than 1.25x
outstanding borrowings.
The new senior secured credit facilities ratings, the corporate
family rating, and the upgrades of iStar's existing ratings are
based on the REIT's success in extending near term debt maturities.
The ratings on the new senior secured credit facilities take into account
the asset coverage, the size and quality of the collateral pool,
the pace of amortization on each tranche and the term of each tranche.
The stable rating outlook reflects iStar's extended debt maturity
schedule, stabilizing asset portfolio, and management's
demonstrated ability to manage its liquidity.
Positive rating momentum would result from successful repayment or refinancing
of debt maturities through 2013, resolution of non-performing
assets and sustained earnings growth.
Negative rating pressure could result should the REIT fail to achieve
resolutions of its non-performing assets at or above the current
carrying value. Any liquidity challenges or covenant breaches would
lead to a downgrade.
The following ratings were assigned:
iStar Financial Inc. - Senior secured credit facility Tranche
A-1 at B1, Tranche A-2 at B2; corporate family
rating at B3
The following ratings were upgraded:
iStar Financial, Inc. -- Senior unsecured debt
to Caa1 from Ca; preferred stock to Caa3 from C; senior debt
shelf to (P)Caa1 from (P)Ca; subordinated debt shelf to (P)Caa3 from
(P)C; preferred stock to Caa3 from C; preferred stock shelf
to (P)Caa3 from (P)C.
Moody's last rating action with respect to iStar Financial Inc.
was on February 24, 2011 when Moody's assigned (P)B1/(P)B2 senior
secured ratings, (P)B3 corporate family rating, and placed
iStar's senior unsecured and preferred ratings on review for possible
upgrade.
iStar Financial's ratings were assigned by evaluating factors we believe
are relevant to the credit profile of the issuer, such as i) the
business risk and competitive position of the company versus others within
its industry, ii) the capital structure and financial risk of the
company, iii) the projected performance of the company over the
near to intermediate term, and iv) management's track record and
tolerance for risk. These attributes were compared against other
issuers both within and outside of iStar's core industry and the company's
ratings are believed to be comparable to those of other issuers of similar
credit risk.
iStar Financial Inc. [NYSE: SFI] is a property finance
company that elects REIT status. iStar provides structured mortgage,
mezzanine and corporate net lease financing. iStar Financial is
headquartered in New York City, and had assets of $9.2
billion and common shareholders' equity of $1.1 billion
as of December 31, 2010.
REGULATORY DISCLOSURES
Information sources used to prepare the credit rating are the following:
parties involved in the ratings, public information, confidential
and proprietary Moody's Investors Service information.
Moody's Investors Service considers the quality of information available
on the issuer or obligation satisfactory for the purposes of maintaining
a credit rating.
Moody's adopts all necessary measures so that the information it uses
in assigning a credit rating is of sufficient quality and from sources
Moody's considers to be reliable including, when appropriate,
independent third-party sources. However, Moody's
is not an auditor and cannot in every instance independently verify or
validate information received in the rating process.
Please see ratings tab on the issuer/entity page on Moodys.com
for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to
a time before Moody's Investors Service's Credit Ratings were fully digitized
and accurate data may not be available. Consequently, Moody's
Investors Service provides a date that it believes is the most reliable
and accurate based on the information that is available to it.
Please see the ratings disclosure page on our website www.moodys.com
for further information.
Please see the Credit Policy page on Moodys.com for the methodologies
used in determining ratings, further information on the meaning
of each rating category and the definition of default and recovery.
New York
Karen Nickerson
VP - Senior Credit Officer
Commercial Real Estate Finance
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
Maria Maslovsky
Asst Vice President - Analyst
Commercial Real Estate Finance
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's Investors Service
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's assigns B1/B2 to iStar Financial's new senior secured facility; B3 corporate family rating; upgrades senior unsecured to Caa1 and preferred stock to Caa3