Strong financial fundamentals bolster the $300 million revolver currently in syndication for Cabot Industrial Properties, according to Philip Kibel, senior analyst at Moody's Investors Service. Kibel, who assigned the credit a Baa2 rating, notes that the company has strong fixed charge ratios as there aren't many debt maturities coming due in the near future. As a cautionary note, however, he added that the company has a high amount of secured debt and high variable debt levels. Cabot owns numerous industrial properties and is based in Boston. The deal is expected to close sometime this month.
Kibel noted that the company's management team is also a plus. He said the team has a solid reputation as core industrial real estate managers. "They've been a conservative management team in the way they finance acquisitions, and have a good track record," he said. "The strategies they've used in the past have proven correct. They're also people who've gone through a few real estate cycles."
CalWest Industrial Properties recently merged with Cabot. CalWest acquires, manages, and leases industrial properties in the Western United States. The outlook for the rating is stable based upon Moody's expectation that the combined company will maintain its sound operating practices and conservative capital structure. In analyzing the portfolio, Moody's aggregates both CalWest's existing portfolio and Cabot's portfolio. One of the challenges the company faces is its geographic concentration in California and the West Coast, Kibel noted.