In a report released today, Moody's Investors Service stated that its outlook is stable on REITs operating in all of the major property sectors, including office, retail, industrial, multifamily, healthcare and lodging industry.
The rating agency said, in the report, that the REIT industry as a whole looked stable. All of the property sectors have steady outlooks for their fundamentals except for multifamily, which has a positive outlook.
According to the rating agency, U.S. investment-grade-rated REITs today are in a better position to weather another recession versus in 2008, which was just before Lehman Brothers collapsed.
This is because these vehicles are better able to cover near-term debt maturities. They also continue to have large and unencumbered pools of assets with which they can raise cash when needed. Moody's also noted that U.S. investment grade REITs today have stronger balance sheets.
"Liquidity was the key to survival in the last recession, as well as balance sheet strength to absorb declines in property values and cash flow," analysts said in the report. "REITs have fewer demands on their liquidity than during the great recession given staggered debt maturities, development pipelines at low levels and significant capacity on their bank revolvers with extended terms. Investment-grade-rated REITs proved resilient during the last recession and are well-positioned should the U.S. economy experience another recession."
