National + Finance | December 9, 2022

Fitch Ratings: 2023 Will Hold Further Challenges for REIT Fundamentals

Challenging economic and financial trends for U.S. REITs will continue into 2023 after emerging in 2022, at best putting a damper on fundamentals for recently better-performing sectors, and at worst further damaging credit profiles for REITs that had already been under pressure, according to Fitch Ratings.

“Fitch expects slower growth for sectors that had been experiencing solid demand, including industrial and open-air shopping, and more difficult conditions for others that have been challenged, including office,” said Chris Wimmer, senior director in Fitch’s U.S. Corporates group.

The rating agency anticipates the balance of its rating outlooks for REITs will move to negative as ratings are stabilized subsequent to downgrades. Office landlords, along with facing lower space utilization, are likely to meet additional incremental leasing challenges in a recessionary economy. Additionally, REITs that depended on favorable capital market conditions and a robust disposition environment to lower leverage will face downward rating pressure.

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About Paul Bubny

Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 15-20 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces. Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and GlobeSt.com at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications. Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).