Moody's Explores Outlook for REITs

NEW YORK CITY-Moody’s Investors Services Real Estate Finance Team held a REIT Credit Review and Outlook Tuesday detailing Moody’s rating outlook for REITs and key issues to focus on for 2003. Unemployment’s effect on economic recovery was one key issue discussed by the team.

“A prolonged economic recovery does not bode well for REITs,” advised Lesia Bates Moss, senior analyst. She said Moody’s is working with REITs to provide information not included in financials to have an accurate and full picture of companies.”REIT managements need to keep portfolio’s competitive,” she advised.

Moody’s chief economist John Lonski pointed out that while the economy is proving to be “less of an adversary” than in the recession of 1990-91, private-sector employment has not grown quarterly since early 2001. “Employment leads capital spending,” he noted, adding that there is every reason to believe that 2003 is where construction activity for offices will decline. “Employment will lead office construction recovery.”