Fitch Places Excel Trust's Ratings on Negative Watch Following Announced Sale of Company

NEW YORK--()--Fitch Ratings has placed its 'BBB-' Issuer Default Rating (IDR) and long-term debt ratings for Excel Trust, Inc. (NYSE: EXL) and its operating partnership Excel Trust, L.P. (collectively, Excel) on Rating Watch Negative following Excel's announced sale to an affiliate of Blackstone Property Partners, L.P. (Blackstone) in an all-cash transaction valued at approximately $2 billion. A complete list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The Negative Rating Watch is driven by uncertainties regarding the planned operating strategy of the company, particularly with respect to any changes in EXL's growth, financing and asset and portfolio management strategies, for which the details are currently undisclosed.

Excel and Blackstone plan to complete the transaction in the second half of 2015, contingent upon customary closing conditions, including the approval of Excel Trust Inc.'s stockholders. Fitch anticipates resolving the Negative Watch around the time of the closing of the transaction.

In connection with the closing of the transaction, Excel Trust, L.P.'s $75 million of 4.40% senior series A notes due 2020 and its $25 million of 5.19% senior series B notes due 2023 will be repaid. The surviving company, BRE Retail Properties, currently plans to leave Excel Trust, L.P.'s $250 million of 4.625% senior notes due 2024 outstanding following the closing. Excel Trust, Inc.'s 7.00% series A cumulative convertible perpetual preferred stock and its 8.125% series B cumulative redeemable preferred stock will be redeemed.

KEY ASSUMPTIONS

The key assumptions driving Fitch's rating case include:

--Excel's leverage sustains in the high 6.0x range through 2016;

--Fixed-charge coverage to sustain in the low 2x range;

--The company primarily refinances secured mortgage maturities with new unsecured borrowings;

--Further portfolio asset and market diversification via acquisitions.

RATING SENSITIVITIES

A deviation from Excel's historical operating strategy and financial policies that results in greater credit risk could lead Fitch to downgrade Excel's IDR and senior unsecured ratings to the 'BB' rating category. Examples could include investing in riskier assets or markets, as well as an increased leverage tolerance and/or an increase in the company's use of secured borrowings that results in lower unencumbered asset coverage of unsecured debt.

Fitch could remove the ratings from Negative Watch and affirm the IDR at 'BBB-' if there are no material strategy deviations and Fitch believes that the surviving company will have access to equity capital as a private company controlled by Blackstone, via fund-level equity commitments.

Fitch has placed the following ratings on Rating Watch Negative:

Excel Trust, Inc.

--Issuer Default Rating (IDR) 'BBB-';

--Preferred stock 'BB'.

Excel Trust, L.P.

--IDR 'BBB-';

--Senior unsecured notes 'BBB-';

--Unsecured revolving credit facility 'BBB-'.

Fitch expects to withdraw its ratings on the preferred stock obligations of Excel Trust, Inc. upon completion of the announced redemptions of its outstanding series A and series B issues.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'U.S. Equity REITs and REOCs Ratings Navigator Companion' (Feb. 5, 2015);

--'Treatment and Notching of Hybrids in Non-Financial Corporate and REIT Credit Analysis' (Nov. 25, 2014);

--'Recovery Ratings and Notching Criteria for Equity REITs' (Nov. 18, 2014);

--'Corporate Rating Methodology' (May 28, 2014).

Applicable Criteria and Related Research:

Recovery Ratings and Notching Criteria for Equity REITs

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=813628

Corporate Rating Methodology - Including Short-Term Ratings and Parent and Subsidiary Linkage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749393

Treatment and Notching of Hybrids in Non-Financial Corporate and REIT Credit Analysis

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=821568

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=982962

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Primary Analyst
Stephen Boyd, CFA
Director
+1-212-908-9153
Fitch Ratings, Inc.
33 Whitehall St
New York, NY 10004
or
Secondary Analyst
Sean Pattap
Senior Director
+1-212-908-0642
or
Committee Chairperson
Steven Marks
Managing Director
+1-212-908-9161
or
Media Relations
Alyssa Castelli, New York, +1-212-908-0540
alyssa.castelli@fitchratings.com
or
Elizabeth Fogerty, New York, +1-212-908-0526
elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Stephen Boyd, CFA
Director
+1-212-908-9153
Fitch Ratings, Inc.
33 Whitehall St
New York, NY 10004
or
Secondary Analyst
Sean Pattap
Senior Director
+1-212-908-0642
or
Committee Chairperson
Steven Marks
Managing Director
+1-212-908-9161
or
Media Relations
Alyssa Castelli, New York, +1-212-908-0540
alyssa.castelli@fitchratings.com
or
Elizabeth Fogerty, New York, +1-212-908-0526
elizabeth.fogerty@fitchratings.com