TEXT-Fitch: outlook stable for US equity REITs in 2013
Link to Fitch Ratings' Report: 2013 U.S. REITs OutlookDec 10 - Vibrant capital markets and lukewarm property fundamentals augur for a continued stable outlook for U.S. equity REITs in 2013, according to Fitch Ratings in its outlook report. One key area, however, that has potentially significant impact and bears close watch will be the looming fiscal cliff. Equity REITs will continue to have solid access to capital, good liquidity, improving fixed charge coverage, and improving property-level fundamentals The fiscal cliff is a concern, however, to both the real economy and property-level fundamentals. Fiscal cliff fallout would erode consumer and business confidence. 'A fiscal cliff-induced recession, were it to take place, would hurt apartment, office and retail landlords the most,' said Managing Director and REIT Group Head Steven Marks. 'Longer-term leases should insulate most companies from an immediate slowdown in the economy, but rent levels would likely decline.' Absent fallout from the fiscal cliff, Fitch expects modest growth in GDP in 2013, which will contribute to slightly positive property-level fundamentals, with multifamily REITs on the most solid ground. Retail, industrial and central business district office REITs should have modestly positive same-store NOI (SSNOI) growth. The suburban office sector will continue to face challenges in maintaining SSNOI. Fitch expects issuers will continue to have liberal access to historically low-cost debt. Leverage, long a concern for Fitch with respect to equity REITs is likely to remain elevated. Fitch expects REITs to fully move away from reducing debt and instead use proceeds from follow-on common equity offerings for development and other growth opportunities. Fitch does not envision meaningful change in REIT acquisition volumes in 2013 compared to this year. '2013 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'
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