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Strong access to capital and flat liquidity coverage for US equity REITs, says Fitch

The median liquidity coverage ratio for select US equity real estate investment trusts (REITs) is 1.8x for the 1 January 2014 to 31 December 2015 period, flat compared with the 1 January 2013 to 31 December 2014 ratio, according to Fitch Ratings' REIT Liquidity Update.

The average percentage drawn from US equity REITs' revolving credit facilities was 11.7 per cent as of 31 December 2013, even lower than 12.5 per cent at the end of 2009.
 
Unlike year-end 2009, when maintaining sizeable revolver capacity was 'defensive' due to capital market dislocations, current dry powder may be used 'offensively' to fund development and/or acquisitions.
 
US equity REIT effective yields dipped below three per cent in late February 2014 for the first time since mid-June 2013, and US equity REIT spreads tightened to 121 basis points currently from 138 basis points at the beginning of 2014.


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