Liquidity Improves Among REITs, Says Fitch

US real estate investment trusts’ (REITs) access to unsecured debt is slowly improving this year, particularly in recent months, Fitch Ratings said. Fitch said 62% ($4.2bn) of the $6.7bn in unsecured bond issuance this year occurred after June 30 and that REITs raised $1.5bn in equity offerings in the same time period. So far this year, REITs have raised $14.4bn in equity issuance. Fitch noted, however, that bond issuance activity remains concentrated among only selected issuers. Fitch said 10 companies executed 15 REIT unsecured bond transactions, 10 of which occurred after June 30. Consolidated unsecured debt as a percentage of total debt decreased to 58.6% as of June 30, down from 65% as of March 31. Fitch said most REITs with investment-grade ratings have liquidity surpluses over the next two and a half years. The improved access to capital is driven by general improvement in the financial markets and the ability of REIT management teams to quickly tap into capital markets. The slight improvements are important to note, Fitch said, because of continued strains on the commercial mortgage-backed securities (CMBS) market and the reduction in secured lending from pension funds, insurance companies and other lenders. But where available, Fitch said these lenders are favoring REITs. Write to Austin Kilgore.

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3d rendering of a row of luxury townhouses along a street

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