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
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
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'