Millennium Parking Garages LLC Rating Placed On CreditWatch Negative On COVID-19 Issues

  • We are placing our 'BBB+' rating on Millennium Parking Garages LLC's (MPG) $205 million senior secured notes on CreditWatch with negative implications.
  • The CreditWatch placement reflects our view that declining parking volumes due to the impact of COVID-19 and the potential for a prolonged period of depressed parking volume caused by COVID-19 (see COVID-19 Macroeconomic Update: The Global Recession Is Here And Now, March 17, 2020) will reduce cash flows and may deteriorate MPG's liquidity in 2020 and beyond 2021, and delay MPG's strategy to strengthen its subscription-based parking revenues and alternate revenues.
  • We could lower the rating by at least one notch, if we expect the project's short-term liquidity to deteriorate significantly or we forecast the project's sustained debt service coverage ratio (DSCR) performance to decline below 1.75x-1.80x. Our expected DSCR for year-end 2021 is 1.89x currently.
TORONTO (S&P Global Ratings) March 23, 2020—S&P Global Ratings today took the above rating actions. Millennium Parking Garages LLC operates and collects revenues for the largest underground downtown parking system in the U.S., over 3.82 million square feet that can accommodate 9,176 cars across four garages in Chicago's East Loop area. The 99-year downtown concession and lease agreement has 86 years remaining. Revenue is primarily from parking usage--contracted parking permits (similar to group bookings at hotels or suite sales at stadiums) and daily demand parking (similar to transient bookings at hotels or game-day ticket sales at stadiums).
The CreditWatch placement reflects the potential for declining parking volumes due to the impact of COVID-19 and a prolonged period of depressed parking volume caused by the outbreak. Over our 90 days CreditWatch period, we will continue to monitor the impact of the pandemic and economic stress on the industry and on the project specifically. We could lower the rating by at least one notch if we expect the project's short-term liquidity to deteriorate significantly or we forecast the project's sustained DSCR performance to decline below 1.80x depending on the duration of the pandemic. We expect to resolve the CreditWatch listing within 90 days.
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