Steady As She Goes for REITs in 2017

Fitch Ratings headquarters in Lower Manhattan.

NEW YORK CITY—Fitch Ratings said Monday it would maintain a stable rating outlook for US equity REITs in 2017, thanks in part to the consistency with which the sector has adopted and maintained credit-friendly financial policies. Other factors weighing in REITs’ favor include expectations for good property fundamentals, consistent leverage profiles and access to attractively priced equity and unsecured bond capital. Furthermore, the ratings agency sees “better portfolio strategies and management, less risky external growth strategies and generally more conservative financial policies” underpinning a positive outlook for the sector.

From the standpoint of fundamentals, Fitch says it expects multifamily to lead the way once more, although same-store NOI growth will be below 2016 levels, and some markets are likely to post negative results. Most retail, industrial and office REITs should have positive SSNOI growth next year, says Fitch.