Fitch affirms EOP Operating

Fitch Ratings said it affirmed the BBB+ senior unsecured rating on the outstanding notes issued by EOP Operating LP, the principal operating subsidiary of Equity Office Properties Trust. Securities affected include $9 billion of notes with maturity dates through 2027. The BBB rating on EOP's $512 million of preferred stock is also affirmed.

The outlook is stable.

Fitch said the ratings reflect the strength and stability of the earnings generated by EOP's portfolio of more than 701 office properties comprising about 123 million square feet. The company's portfolio of leased properties is geographically diverse, located in 18 states and the District of Columbia, which reduces its vulnerability to specific market risks and contributes to the predictability of the company's earnings stream.

Rating concerns center on weak demand in the office sector, which has contributed to declines in EOP's portfolio occupancy (86.3%) and rents, reducing property level earnings. Additionally, increased vacancy rates have necessitated the expansion of capital expenditures needed to attract and retain office tenants in the current environment.

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