Fitch affirms Equity Office Properties

Fitch Ratings said it affirmed Equity Office Properties Trust's BBB long-term issuer default rating and BBB- preferred stock rating and EOP Operating LP's BBB long-term issuer default, senior unsecured debt and bank loan facility ratings following the company's announcement that it will be acquired by Blackstone Real Estate Partners, an affiliate of The Blackstone Group.

The outlook is stable.

The agency said that although the company has not definitively outlined its plans, Blackstone is likely to significantly lever up the remaining structure and encumber most of the unencumbered assets. Existing bond covenants prevent excessive leverage, which leads to the likelihood of repayment of outstanding bonds. Based on Fitch-calculated pro forma numbers, it would take just over $1.4 billion of additional debt to trip the debt-to-adjusted asset covenant, which the agency said appears to be a limited amount of additional debt, particularly in regards to the level by which a firm like Blackstone typically funds its acquisitions.

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