Tough Times Ahead for Multifamily REITs: Fitch

NEW YORK CITY-Multifamily REITs are in for a bumpy ride during the remainder of 2002 following a significant recession-driven slowdown, according to newly published research from Fitch Ratings. The report cites an imbalance between supply and demand in many markets as a major catalyst for the slowdown, and says the phenomenon is especially significant because it is historically unprecedented in the multifamily sector.

“Demand for multifamily product is in direct correlation with the health of the economy and employment growth, and a prolonged economic downturn coupled with further weakening in employment could begin to pressure credit ratings,” says Fitch director Brendan Thorpe. “An additional negative influence on multifamily product demand is the relatively low interest rate environment that has made single family home ownership an attractive and affordable alternative to multifamily.”