Fitch U.S Says CMBS Newsletter: Hotel Defaults May Hit 30% By 2012

NEW YORK, NY--Loan defaults for U.S. hotel CMBS show no signs of slowing down as a large concentration of loans come due next year and in 2012 , according to Fitch Ratings in its latest weekly U.S. CMBS market trends newsletter.

Despite 20% hotel revenue declines since the peak in 2008 (the largest decline among the major CMBS property types), Fitch’s Outlook for the hotel sector remains Negative. Delinquencies for hotel CMBS currently stand at 16.6%, representing approximately $8.4 billion in total hotel loan balance. Fitch projects delinquencies to double from current levels and hit 25-30% by 2012 even as operating performance begins to
stabilize.

‘Hotel property values are off as much as 50% from 2007 peaks, but borrowers by and large have been able to keep their loans current because of historically low Libor rates,’ said Senior Director Jeffrey Watzke. However, ‘Over three-quarters of floating-rate hotel loans originated during 2006-2007 mature in 2011 and 2012 into much higher fixed rates,’ said Watzke.

Additional information is available in Fitch's weekly e-newsletter, 'U.S. CMBS Market Trends'. The link below enables access to Fitch's U.S. CMBS Market Trends weekly updates:

Contact:
 Jeffrey Watzke +1-312-606-2358, Chicago or Eric Rothfeld, +1-212-908-0761, New York.
Media Relations: Sandro Scenga, New York, Tel: +1 212-908-0278: sandro.scenga@fitchratings.com.
Additional information is available at http://www.fitchratings.com/

Fitch: Specially Serviced U.S. CMBS May Reach $100B by End-2009

NEW YORK, NY-July 30, 2009: With close to $50 billion in U.S. CMBS now in special servicing, that number may approach $100 billion by the year end, representing approximately 12% ($96 billion) of total outstanding CMBS, according to Fitch Ratings in a new report.

"The resources of special servicers will continue to be stretched, which will intensify scrutiny on their preparedness,’ said Managing Director Stephanie Petosa. "Compounding the problem is that many of these loans expected to default are large and complicated loans."

Despite the growth in specially serviced loans, Fitch does not expect the same rate of growth on CMBS delinquency rates.

Fitch is projecting delinquencies on U.S. CMBS to eclipse 5% by the end of 2009. Fitch monitors servicing portfolio volume and is provided year-end and quarterly data from Fitch-rated special servicers.

The data in the report includes information for Fitch and non-Fitch rated CMBS transactions.

Fitch will continue to measure servicer performance through the collection and analysis of management reports from its rated servicers and come to the market with timely commentary as developments unfold.

Contacts:

Stephanie Petosa +1-212-908-0720,

Alyson Weems +1-212-908-0305, New York or

Richard Carlson +1-312-606-2373, Chicago.

Fitch: Gray Clouds Persist for Equity REITs Despite Rays of Sunshine

NEW YORK, NY--While recent financial market improvements are allowing equity REITs to execute opportunistic actions to reduce financial pressures, several challenges remain, according to Fitch Ratings in the latest edition of its 'REIT Report Quarterly'.

"Most REITs will need to address tenuous access to financing across the capital markets,’ said Managing Director and REIT group head Steven Marks. (top right photo)

"REITs are also contending with an unprecedented downturn in property markets, as indicated by increasing tenant defaults and reductions in net operating income."

Other potentially adverse developments awaiting equity REITs include the sizable overhang of debt maturities in 2011 and 2012 and limited visibility regarding net operating income capitalization rates, which continues to stress commercial property values. Many equity REITs will face challenges to maintain current rating levels.

During the second quarter of 2009, Fitch assigned a rating to SL Green Realty Corp and assigned a new security-specific rating to Westfield Group’s US$700 million debt issue.

While Fitch affirmed 11 REITs, Fitch also revised the Rating Outlook on six of these companies to Negative from Stable. Fitch downgraded nine REITs, with eight of the companies remaining either on Rating Watch Negative or with a Negative Outlook.

Fitch maintains a Negative Outlook for the U.S. Equity REIT sector, indicating an increased likelihood for downgrades or Negative Rating Watches/Outlooks.

Additionally, due to falling valuations and rents, and despite the fact that Fitch-rated issuers in this sector generally have liquidity surpluses, the rating outlook for European REITS is negative. However, individual issuer Outlooks and Watches are the best indicators of future rating direction.

Other items in this edition of Fitch's 'REIT Report Quarterly' include an overview of recent rating actions, summary of two special reports, seven market commentaries, and links to recent Fitch research.

The newsletter is available on the Fitch Ratings web site at 'www.fitchratings.com' under the following headers: Financial Institutions >> REITs >> Newsletters

Contacts: Steven Marks +1-212-908-9161, New York; Julian Crush +44 20 7682 7370, London; or Ben McCarthy +61 2 8256 0388, Sydney.

Media Relations: Sandro Scenga, New York, Tel: +1 212-908-0278, Email: sandro.scenga@fitchratings.com;

Peter Fitzpatrick, London, Tel: +44 (0)20 44 20 7417 4364, London, Email: peter.fitzpatrick@fitchratings.com

Fitch REIT Credit Analysis: Sovran Self Storage Liquidity Concerns Lead to Negative Watch

NEW YORK, NY-- A decrease in liquidity, combined with near-term debt maturities resulted in Fitch placing Sovran Self Storage’s(Sovran) Issuer Default Rating (IDR) on Negative Watch, according to the latest credit analysis update by Fitch Ratings.

Sovran’s existing ratings are supported by strong coverage metrics and solid operating performance. Fitch placed Sovran’s IDR on Rating Watch Negative on April 8, 2008 Fitch's latest credit analysis update on Sovran, which provides more detail supporting Fitch's rating actions, is available on the Fitch Ratings website at ' http://www.fitchratings.com.

Fitch currently rates Sovran and affiliate Sovran Acquisition Limited Partnership (SALP) as follows: Sovran--IDR 'BBB-'.SALP--IDR 'BBB-';--Senior unsecured revolving credit facility 'BBB-';--Senior unsecured term notes 'BBB-'.

Primary credit strengths include the following:--Strong fixed-charge coverage;--Solid property-level fundamentals;--Manageable leverage and adequate risk-adjusted capital.

Primary credit concerns include the following:--Limited liquidity;--Significant near-term debt maturities;--Geographic concentration.

Contacts:

Steven Marks

+1-212-908-9161 or Sean Pattap

+1-212-908-0642, NewYork.

Sandro Scenga

Director Corporate Communications

Fitch Ratings

+1-212-908-0278

sandro.scenga@fitchratings.com

Fitch Revises Public Storage's Outlook to Positive; Affirms IDR at 'A-'

NEW YORK, NY-- Fitch Ratings has affirmed the following ratings of Public Storage (NYSE: PSA) and its affiliate, Shurgard Storage Centers, Inc. (collectively, PSA or the company):

Public Storage

--Issuer Default Rating (IDR) at 'A-';

--$300.0 million unsecured credit facility at 'A-';

--$3.5 billion preferred securities at 'BBB+';

Shurgard Storage Centers, Inc.

--IDR at 'A-';

--$410.9 million senior unsecured notes at 'A-'.

In addition, Fitch has revised PSA’s Rating Outlook to Positive from Stable.

For a complete copy of Fitch Ratings' news release, please contact Sandro Scenga, Sean Pattap or Steven Marks at the phone numbers and e-mails listed at the bottom of this release.

PSA’s ratings are supported by the cash flows generated by the company’s sizeable portfolio of over 2,100 self-storage facilities in 38 states within the United States and seven Western European countries.

The 'A-' IDR further echoes management’s opportunistic approach toward self-storage property acquisitions and refinancings through economic cycles. PSA’s ‘A-’ IDR is also supported by the company’s solid risk-adjusted capitalization and large unencumbered asset pool with an undepreciated book value of $10.3 billion as of Dec. 31, 2007.

Moreover, the ratings reflect PSA’s ratio of undepreciated stabilized unencumbered properties to unsecured debt and preferred stock of 2.6x as of Dec. 31, 2007.

CONTACTS:

Sandro Scenga

Director

Corporate Communications

Fitch Ratings

1-212-908-0278

sandro.scenga@fitchratings.com

Sean Pattap

1 212 908 0642

Steven Marks

1 212 908 9161

Fitch: Liberty Property Trust’s Conservative Leverage Levels Support Ratings

(Comcast Center, a 58-story, 1.25-million-sf, 975-foot tall, class A office location at 1701 John F. Kennedy Blvd. in downtown Philadelphia, is a Liberty Property Trust asset.)

NEW YORK, NY-- Liberty Property Trust’s (Liberty) leverage, risk-adjusted capital and unencumbered asset coverage ratios remain at levels commensurate with a ‘BBB+’ Issuer Default Rating (IDR), but are balanced by Liberty’s weakening coverage ratios, according to the latest credit analysis update by Fitch Ratings.

Fitch affirmed Liberty's 'BBB+' IDR on March 12 with a Stable Outlook. Fitch’s current Issuer Default Ratings (IDR) for Liberty are as follows: Liberty Property Trust --IDR ‘BBB+’. Liberty Property Limited Partnership --IDR ‘BBB+’.

Primary credit strengths include the following:

--Solid unencumbered asset coverage;

--Manageable debt maturity and lease expiration schedules;

--Conservative leverage and adequate risk-adjusted capitalization; and

--Solid, albeit weakening, same-store operating performance Primary credit concerns include the following:

--Adjusted funds from operations payout ratio in excess of 100%;

--Declining trend in coverage ratios;

--Concentration of net rental income from Pennsylvania / New Jersey region; and

--Lease-up risk from development pipeline.

Fitch's latest credit analysis update on Liberty, which was published on April 15, provides more detail supporting Fitch’s ratings, and is available on the Fitch Ratings web site at http://www.fitchratings.com/.

Contact:

Steven Marks

+1-212 908-9161 or

Janice Svec

+1-212-908-0304,

New York.