Fitch Publishes Criteria for Rating U.S. Equity REITs and REOCs

NEW YORK--()--Fitch Ratings today published an updated sector-specific criteria report that addresses Fitch's methodology on analyzing the credit risk of U.S. equity real estate investment trusts (REITs) and real estate operating companies (REOCs). The report, titled 'Criteria for Rating U.S. Equity REITs and REOCs,' updates and replaces a report of the same title dated Feb. 27, 2012.

Fitch's approach for analyzing U.S. equity REIT and REOC credit risk continues to have three primary components: a review of management, a financial analysis, and a review of the issuer's property portfolio.

Factors having an impact on management review include the quality of the team, adaptation, financial discipline, strategy, experience and track record, and corporate governance.

Financial factors include a review of recurring cash flow and fixed charge coverage, financial flexibility, access to capital, liquidity, contingent liquidity from unencumbered assets, as well as balance sheet, capitalization, and leverage. Fitch primarily utilizes base case projections, and also uses stress case projections and a risk-adjusted earnings stress scenario in the rating process.

Factors pertinent to the property portfolio include investment granularity, market focus, and asset quality, particularly location, tenant profiles, lease expirations, lease renewals rates, lease duration, and lease rollover rates.

The criteria report addresses other factors such as development, joint ventures, covenants, and peer analysis.

The full report is available on Fitch's web site at 'www.fitchratings.com'.

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

Applicable Criteria and Related Research:

--'Criteria for Rating U.S. Mortgage REITs and Similar Finance Companies,' Feb. 26, 2013;

--'Recovery Rating and Notching Criteria for Equity REITs,' Nov. 12, 2012;

--'Treatment and Notching of Hybrids in Nonfinancial Corporate and REIT Credit Analysis,' Dec. 13, 2012.

--'Parent and Subsidiary Rating Linkage,' Aug. 8, 2012.

--'Distressed Debt Exchange,' Aug. 8, 2012.

--'Corporate Rating Methodology,' Aug. 8, 2012.

Applicable Criteria and Related Research Criteria for Rating U.S. Equity REITs and REOCs

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=700091

Corporate Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=684460

Recovery Ratings and Notching Criteria for Equity REITs

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=693751

Treatment and Notching of Hybrids in Nonfinancial Corporate and REIT Credit Analysis

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=696670

Parent and Subsidiary Rating Linkage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=685552

Distressed Debt Exchange

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=685903

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.

Contacts

Fitch Ratings
Steven Marks
Managing Director
+1-212-908-9161
Fitch, Inc.
One State Street Plaza
New York, NY 10004
or
Sean Pattap
Senior Director
+1-212-908-0642
or
Media Relations
Sandro Scenga
+1-212-908-0278
sandro.scenga@fitchratings.com

Sharing

Contacts

Fitch Ratings
Steven Marks
Managing Director
+1-212-908-9161
Fitch, Inc.
One State Street Plaza
New York, NY 10004
or
Sean Pattap
Senior Director
+1-212-908-0642
or
Media Relations
Sandro Scenga
+1-212-908-0278
sandro.scenga@fitchratings.com