Fitch rates Toys 'R' Us B-, notes B+

Fitch Ratings said it has assigned an issuer default rating of B- to Toys "R" Us Property Co. II, LLC (previously known as Giraffe Holdings, LLC) and rates Toys 'R' Us Property Co. II, LLC's new $650 million of senior secured notes B+/RR2.

The notes are secured by first-priority liens on 129 properties held in a bankruptcy-remote entity with a Master Lease covering all the properties, which requires Toys Delaware to pay all costs and expenses related to the ownership, operation, leasing and maintenance of the properties, the agency said.

In addition, while the property company currently does not have any subsidiaries, the notes will benefit from guarantees by any future subsidiary of the property company, Fitch said, noting that proceeds from the offering, an intercompany loan and a cash contribution from Toys 'R' Us, Inc., as well as the release of restricted cash and cash on hand will be used to repay the existing $600 million Giraffe Holdings CMBS facility and $200 million MPO Holdings CMBS facility.

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