Fitch cuts Sun Communities to junk

Fitch Ratings said it downgraded to BB from BBB- and withdrew its issuer rating for Sun Communities Operating LP following the company's announcement that it will reposition its balance sheet with secured debt and alter its financing strategy going forward.

Further, Fitch said it will withdraw its senior unsecured ratings on Sun Communities Operating LP's outstanding $350 million, which have been substantially tendered in connection with the company's pending recapitalization.

On April 8 Sun Communities Inc. announced a cash tender offer for each of Sun Communities Operating LP's, its majority owned operating partnership subsidiary, four outstanding unsecured bond issues totaling $350 million. Additional terms of the tender provided that a tender of two thirds of the bond would allow for an amendment to the bond indenture eliminating the financial covenants.

Sun Communities included the following information in its tender announcement, "In our view, the established stability of the revenue streams in our asset sector and of our company in particular, supports prudent increases in debt ratios above those permitted by the note restrictions."

In connection with this balance sheet repositioning, Sun Communities has received commitments of $250 million from Fannie Mae and $500 million from Bank of America CMBS Capital Markets in secured funding.

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