Fitch lowers credit ratings for AMB Property

NEW YORK

Fitch Ratings on Thursday lowered its credit ratings for AMB Property Corp., saying the global industrial real state investment trust's portfolio could come under pressure if global economic conditions worsen.

The ratings agency downgraded its issuer default rating to "BBB" from "BBB+" and its preferred stock to "BB+" from "BBB-."

Fitch also lowered its issuer default rating for AMB Property's operating partnership, AMB Property LP, to "BBB" from "BBB+" and unsecured revolving credit facilities to "BBB" from "BBB+."

In addition, Fitch assigned a rating of "BBB" to an unsecured term loan for AMB Japan Finance Y.K.

Fitch also revised its outlook on AMB to "Stable" from "Negative."

The firm's rating action reflects its expectation that AMB's near-to-medium term credit profile will remain consistent with an issuer default rate of "BBB" and takes into account Fitch's "Negative" outlook for the industrial real estate investment trust sector this year.

Industrial REITs are experiencing weakened overall tenant demand and sharply reduced market rents and occupancy rates, Fitch said.

While market conditions have modestly improved in the industrial market, macroeconomic conditions remain uncertain and further weakening of the global economy could put further pressure on the performance of AMB's portfolio. That could have a negative impact on AMB's credit profile.

AMB, which is based in San Francisco, has assets in 48 markets in 15 countries.

Fitch noted that AMB has demonstrated good access to capital and raised about $2.5 billion in public and private debt and equity capital since the beginning of last year.

But the company has seen rental rates on renewal and rollover leases decline across its portfolio in the first half of this year, driving down its operating income, Fitch said.

About 39 percent of AMB's leases by annualized base rents expire by the end of 2012, which suggests the potential for further pressure on rent renewals and rollovers going forward, Fitch said.

Shares of AMB fell 36 cents to $24.22 on Thursday.