Moody's downgrades TPG-Austin

Moody's Investors Service said it downgraded TPG-Austin Portfolio Holdings LLC's corporate family rating, $193 million term loan due 2013 and a $100 million revolving credit facility due 2012 to Caa2 from B1.

The ratings remain on review for downgrade.

TPG-Austin is a wholly owned subsidiary of a joint venture between Thomas Properties Group, Inc., California State Teachers Retirement System and Lehman Brothers Holdings and some co-investors. The $100 million revolver is undrawn and has not been available since Lehman Brothers Commercial Paper, the sole lender, declared bankruptcy in September.

The agency said the downgrade and review reflect TPG-Austin's severely constrained liquidity and the likelihood that the partnership could seek bankruptcy protection in early 2009. TPG-Austin recently filed a motion with U.S. Bankruptcy Court to compel Lehman Brothers to assume or reject the credit agreement and allow the partnership to seek alternative senior secured financing arrangements with the facility's collateral. In its motion, TPG-Austin indicated that if Lehman does not honor its commitments on the revolver, it expects to run out of cash in January, at which point about $19 million in property taxes comes due.

TPG-Austin also needs funding to cover capital expenditures, leasing commissions and potential debt service shortfalls, Moody's added.

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