Merrie Frankel, vice president and senior credit officer at Moody’s Investors Service, joined REIT.com for a video interview at REITWorld 2015: NAREIT’s Annual Convention for All Things REIT at the Wynn Las Vegas.
Frankel discussed the outlook for REITs raising capital through unsecured debt. She noted that as of mid-November, REITs had issued $28 billion of unsecured debt, compared with about $31 billion for all of 2014.
“There was a little hiatus in August and September, with the volatility in the markets, when REITs weren’t issuing so much. Once third quarter earnings ended, they’ve been issuing again,” she observed.
Frankel also commented on REITs tapping commercial paper (CP) as a short-term borrowing strategy.
Frankel stressed that only a limited number of REITs, including Simon Property Group, Inc. (NYSE: SPG) and Equity Residential (NYSE: EQR), have CP ratings. She said Moody’s expects that group to remain small.
“It really comes down to a handful of REITs that would have the liquidity that’s needed, with the line of credit being the backstop, as well as the ratings,” she said.
Meanwhile, Frankel said REIT credit profiles continue to be stable.
“Metrics have been going in the right direction,” she said. Low interest rates have allowed REITs to refinance their mortgages and bonds. REITs are re-financed well into 2016 and beyond, which has helped them to ladder their debt maturity schedules even more, she said.