Fitch: Bank Exposure Risk Increasing for U.S. REITs

NEW YORK--(BUSINESS WIRE)-- Link to Fitch Ratings' Report: Trends in U.S. Equity REITs Unsecured Lines of Credit (Favorable Trends Continue Amid Capital Markets Volatility)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=882177

U.S. REITs are still taking advantage of a favorable bank lending environment, though signs of more risk are emerging according to Fitch Ratings in a new report.

Unsecured revolving lines of credit remain a critical capital source for REITs and are used primarily to fund acquisitions and development before tapping the debt or equity markets. Fitch expects renewals will remain favorable to borrowers for the foreseeable future as spreads decrease and commitment sizes increase. That said, debt capital structure risk is inching up.

'There has been an increase in revolver draws brought on primarily by recent capital market volatility,' said Managing Director Steven Marks. 'Coupled with higher term loan usage, this is a clear sign that REITs are relying more on bank capital.'

'Bond market volatility is also causing several lower rated REITs to accept unfavorable pricing when they come to market with new debt or pull debt offerings altogether and access the term loan market,' said Marks. Higher rated REITs haven't been immune to the recent bond market volatility, having to use unsecured term loans to pay off revolvers to navigate through capital market turbulence.

'Trends in U.S. Equity REITs Unsecured Lines of Credit' is available at 'www.fitchratings.com' or by clicking on the above link.

Additional information is available at www.fitchratings.com.

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View source version on businesswire.com: http://www.businesswire.com/news/home/20160602006199/en/

Fitch Ratings
Daniel Kornblau
Associate Director
+1-646-582-4946
Fitch Ratings, Inc., 33 Whitehall Street, New York, NY, 10004
or
Steven Marks
Managing Director
+1-212-908-9161
or
Media Relations:
Sandro Scenga, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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