Moody's Investors Service also took action based on Sun's plan, lowering the ratings of Sun's senior unsecured debt to Baa3 from Baa2. Moody's also said the ratings remain under review for possible downgrade.

The CreditWatch placements followed Sun's announcement of a tender offer to purchase all outstanding senior unsecured notes at par value plus a specified spread over the yield to maturity. Sun is also soliciting note holders' consent to eliminate the restrictive covenants under the debt. Sun will pay $30 per $1,000 of principal amount of the tendered notes to holders who properly tender their notes and consent by April 19.

Depending upon the degree to which the offer is accepted, S&P said the ratings will either be lowered or withdrawn. The tender offer will initially be funded with a $625-million bridge loan, which the REIT expects to repay with the proceeds of up to $250 million in secured financing provided by Fannie Mae and up to $500 million in proceeds from a pending collateralized mortgage-backed securities transaction.The balance of the proceeds will be used to repay and retire Sun's unsecured line of credit, acquire properties, repurchase common shares, and for general corporate purposes."These transactions represent the most significant capital events of the company since our initial public offering in 1993," says Gary Shiffman, Sun chairman and chief executive officer. "Our unsecured notes were originally rated investment grade in 1996 and this rating was upgraded in 1999 by both Moody's Investors Services and Standard & Poors.