News Column

Fitch: Smooth Ride to Continue for U.S. Equity REITs for Rest of 2014

June 2, 2014



NEW YORK--(BUSINESS WIRE)-- Link to Fitch Ratings' Report: 2014 Midyear Outlook: U.S. Equity REITs

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748688

The first six months of 2014 have been smooth sailing for U.S. equity REITs, with little change likely for the second half of the year, according to Fitch Ratings in its 2014 midyear outlook report.

Fitch expects U.S. equity REITs will continue to have strong access to capital and solid liquidity. Additionally, property-level fundamentals should improve moderately across most asset classes.

'Multifamily REIT fundamentals should remain the strongest and continue on a positive trajectory for 2014, though the pace of growth is slowing,' said Managing Director Steven Marks. Most retail, industrial and central business district (CBD) office REITs should have modestly positive same-store net operating income growth. 'The suburban office sector will face challenges in maintaining margins when considering recurring capital expenditures,' said Marks.

Outside the multifamily sector, most REITs have a modest cost-to-complete for their development pipelines. This is indicative of lower-risk growth strategies, good liquidity management and fundamentals that generally do not justify speculative development.

U.S. REITs are not likely to increase leverage from current levels or meaningfully de-lever during 2014. Nearly all proceeds from follow-on common equity offerings will likely be used for development or paired with acquisitions or other growth opportunities on a leverage-neutral basis. Any de-levering will likely be organic as companies grow their recurring operating EBITDA and retain cash flow. Stock buybacks should remain modest but represent the largest threat to maintaining stable leverage metrics.

'2014 Midyear Outlook: U.S. Equity REITs' is available by clicking on the link or by visiting 'www.fitchratings.com' under 'Latest Research'.

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

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.



Fitch Ratings

Steven Marks, +1 212-908-9161

Managing Director

Fitch Ratings, Inc., 33 Whitehall Street, New York, NY 10004

or

Media Relations:

Sandro Scenga, +1 212-908-0278

sandro.scenga@fitchratings.com

Source: Fitch Ratings


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