Fitch cuts SL Green, rates loan BB+

Fitch Ratings said it downgraded the issuer default ratings for SL Green Realty Corp.'s (SLG) issuer default rating and its subsidiary, SL Green Operating Partnership, LP to BB+ from BBB-. The agency also assigned a BB+ rating with an RR4 recovery rating to SL Green Operating Partnership's $425 million term loan with an October 2023 maturity with a six-month as-of-right extension option to April 2024.

“Despite the expectation of stabilizing leverage, Fitch's ratings consider the low unencumbered asset coverage of unsecured debt (UA/UD), which has persisted meaningfully below 2x since the beginning of the Covid-19 pandemic, coinciding with SLG's transition to more of an asset management model.

“This is mitigated to some extent by SLG's credit strengths, including its relatively strong, high-quality New York office portfolio that features above-average occupancy rates, long-term leases to solid credit tenants and strong contingent liquidity from institutional lenders and investors,” the agency said in a press release.

The outlook is negative.

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