Fitch Rates BRE Properties' $150MM Sr Note Offering 'BBB+'

Business Wire, March 13, 2002

Business Editors

NEW YORK--(BUSINESS WIRE)--March 13, 2002

Fitch Ratings has assigned its 'BBB ' rating to a recent $150 million issuance of senior unsecured notes due March 2007 by BRE Properties Inc. (NYSE:BRE).

Proceeds to reduce amounts under its line of credit. Fitch has also affirmed its 'BBB ' rating of $483 million of previously outstanding senior unsecured notes due 2004 through 2013, and 'BBB' rating of $53.7 million of existing preferred stock. The Rating Outlook remains Stable.

The ratings reflect BRE Properties' good asset quality, solid property fundamentals in a constrained economic environment, experienced management team and an investment focus on the multifamily sector -- a less volatile real estate asset class. These positives are balanced by its significant geographic exposure to the San Francisco area (representing 29% of its total NOI), and its considerable development pipeline represents 13% of total assets, including joint ventures.

BRE maintains good financial flexibility with approximately 88% of its total assets unencumbered, which supports its unencumbered assets over unsecured debt at 2.1 times (x) coverage at conservative historical value. BRE's continued access to capital, sound balance sheet management, minimal refinancing risk and adequate availability under its line of credit help support its current ratings. BRE's debt plus preferred to un-depreciated book capital is 53% (42% at market), and its proforma interest and fixed charge coverage (including capitalized interest) are at 3.5x and 2.6x, respectively, and considered satisfactory, but not strong for its ratings category.

Several of BRE's markets have witnessed negative same-store NOI growth (as of fourth-quarter 2001) such as San Francisco/area (-8%), Phoenix (-5%) and Portland (-2%), although, this was offset by positive NOI growth in San Diego (10%), Sacramento (8%) and Los Angeles/Orange County (3%). Fitch anticipates continued softness in property fundamentals within several of its more challenged markets, which may temper earnings growth, constrain operating performance and may pressure BRE's credit statistics.

However, BRE has the capacity to manage through this current environment with its conservative financial profile and financial flexibility that has been improved by the recent note offering, although bank and variable rate debt exposure has been somewhat more aggressive in the past.

BRE Properties Inc. is an owner and operator of multifamily properties with a total market capitalization of $2.6 billion as of Dec. 31, 2001. Headquartered in San Francisco, Calif., BRE owns, develops and manages multifamily properties, primarily class A/B gardens-style properties in six western states. As of Dec. 31, 2001, BRE owned or had interest in 84 properties and consisting of 23,772 units, including 2,111 units under construction and 1,242 units in joint ventures.