Fitch may cut AMB, lift ProLogis

Fitch Ratings said it placed on Rating Watch positive ProLogis' issuer default rating of BB+, global line credit facility rated BB+, senior notes rated BB+, convertible senior notes rated BB+ and preferred stock rated BB-.

The agency also placed on Rating Watch negative AMB Property Corp.'s issuer default rating of BBB and preferred Stock rating of BB+ and AMB Property, LP's issuer default rating of BBB, senior notes rated BBB and revolving bank credit facilities rated BBB.

The action follows the announcement that ProLogis and AMB agreed to merge, according to the agency.

Fitch said the combined company will have a stronger fixed charge coverage ratio and lower leverage than ProLogis on a standalone basis and a weaker fixed charge coverage ratio and higher leverage than AMB on a standalone basis.

ProLogis' net debt-to-recurring operating EBITDA ratio would approach 9.0x in 2011 and AMB's net debt-to-recurring operating EBITDA ratio would be about7.5x in 2011. The combined entity will initially maintain a leverage ratio in the 8.0x to 8.5x range, Fitch said.

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