According to Fitch Ratings in the latest edition of its 'REIT Report Quarterly', the slowing economy has had a negative effect on rent growth prospects, placing downward pressure on real estate investment trust (REIT) operating results. Negative implications for credit quality are pervasive, and include: anticipated worsening fixed-charge coverage ratios, more challenged liquidity profiles, a difficult asset sales market that hinders REITs' ability to sell weaker-performing assets to recycle capital and reduce leverage, and reductions in the size and quality of unencumbered asset pools to support unsecured debt. Many equity REITs will face difficulties in maintaining current rating levels.
During the first quarter of 2009, Fitch upgraded one health care REIT and revised the Rating Outlook of another health care REIT to Positive from Stable. While 14 REITs were affirmed, Fitch revised the Rating Outlook on five of these companies to Negative from Stable. Fitch took eight downgrade actions this quarter and all downgraded companies remain on Negative Watch or have a Negative Outlook.
Fitch's 2009 rating outlook for the equity REIT sector continues to be negative.
Other items in this edition of Fitch's 'REIT Report Quarterly' include an overview of recent rating actions, summary of two special reports, four market commentaries, and links to recent Fitch research. The newsletter is available on the Fitch Ratings web site at www.fitchratings.com under the following headers:
Financial Institutions then REITs then Newsletters
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 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.
Contacts:
Fitch Ratings, New York
Steven Marks, 212-908-9161
Kimberly
Chan, 212-908-0346
or
Media Relations:
Cindy Stoller,
212-908-0526
Email: cindy.stoller@fitchratings.com