Fitch cuts Equity Residential

Fitch Ratings said it downgraded the issuer default ratings of Equity Residential and ERP Operating LP to BBB+ from A-, Equity Residential's preferred stock to BBB- from BBB and ERP Operating's senior notes and exchangeable senior notes to BBB+ from A-.

The outlook was revised to stable from negative.

The rating actions are based on Fitch's expectation that Equity Residential's near- to medium-term credit profile, particularly its leverage, will be consistent with a BBB+ issuer default rating.

The company's net debt-to-recurring operating EBITDA ratio increased to 8.9 times as of Sept. 30 from 8.1 times as of Dec. 31, 2009. However, the agency said it expects that proceeds from near-term asset sales will be used to repay debt, which will have an immediate positive impact on leverage.

The ratings are supported by moderating property-level fundamentals and Equity Residential's solid franchise, consistent cash flow coverage metrics and strong liquidity management, Fitch said.

Offsetting these rating strengths are the company's elevated leverage and sizeable near-term debt maturities, the agency added.

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