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Upgrades, downgrades about even in S&P's recent REIT ratings actions

Of the93 U.S. equity REITs that Standard & Poor's Ratings Services rates, 13 companieshave seen corporate long-term credit ratings actions in the last six months — includingseven upgrades, five downgrades and one initiation — as of April 26.

The REITsrange in market cap from just over $1 billion to nearly $30 billion and includesix specialty REITs, two diversified REITs, two casino REITs, one office REIT, oneself-storage REIT and one regional mall REIT.

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saw themost recent U.S. REIT corporate credit rating movement on April 22 when it was by S&P to BBB- fromBB+. The rating agency said the upgrade primarily reflected Spirit's recently upsizedequity issuance, whichresulted in net proceeds after fees of $369 million. The outlook is stable.

S&Passigned an initial B+ rating to MGMResorts International's new REIT subsidiary, MGM Growth Properties, on April 1. The rating reflects theoutlined capital structure of the new company, including a $2.75 billion and a $1.05 billionsenior unsecured notes . The outlook is positive.

received a from S&P in the wakeof the completion of itsmerger deal with Plum Creek TimberCo. Inc. The corporate credit rating was lowered to BBB- from BBB. TheBBB- could be lowered further to BB+ over the next 24 months if debt leverage issustained above 4x due to weaker-than-expected log and lumber sales and prices ora delay in or lower proceeds from the sale of the company's cellulose fibers business.For now, the outlook is stable.

received anupgrade to BBB- from BB+.S&P analyst Anita Ogbara said in a report that the upgrade "reflects S&P'sexpectation that SL Green will use proceeds from asset sales to repay debt and continueto benefit from modest demand and disciplined supply growth in the Manhattan officemarket." The outlook is stable.

Sincethe beginning of 2010, U.S. equity REITs have seen a total of 91 S&P corporatelong-term credit ratings upgrades, 25 downgrades and 30 initiations, as of April26. During that time period, 2014 saw the most overall movements — at 36 — including15 initiations, which is equal to the aggregate number of initiations in all theother years since 2010.

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In 2013,U.S. equity REITs saw the largest number of S&P corporate long-term credit ratingupgrades of any year since 2010, with 24. The year 2011 was the only year duringthis period that S&P did not initiate a rating on a U.S. equity REIT.

Lookingat the industry in its entirety, 93 companies were rated by S&P as of April26. Of these companies, 68 had investment grade ratings of BBB- or higher, while25 were rated as non-investment grade.

On anindividual basis, industry giants SimonProperty Group Inc. and PublicStorage led the pack with the highest S&P corporate long-term creditratings. The A-rated companies last saw corporate ratings changes by S&P inMay 2013 and December 2010, respectively. Meanwhile, trailing at the bottom of thegroup are B-rated FelCor Lodging TrustInc. and CareTrust REITInc.

Of theequity REITs rated by S&P, on a sector level, shopping center, multifamily,self-storage and regional mall REITs all boasted 100% investment-grade ratings,as did 14 of the 15 office REITs.

Conversely,three of the four S&P-rated hotel REITs held non-investment-grade ratings, aswell as 61% of the specialty REITs and both casino REITs.

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Use SNL's Real Estate Credit Analysis Template to examine REIT credit ratings, debt covenants, debt maturities, lease expirations and much more. Other templates are available in SNL's Template Library.





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