NEW YORK -- Moody's Investor Services is downgrading its rating outlook for real estate investment trusts to relatively stable from strongly positive in 1997, according to its 1998 REIT Industry Outlook.
The change is attributable to increased merger activity among REITs, which may cause credit volatility; expansion into new businesses by the REITs, which could lead to higher leverage and greater risk; and higher prices being paid for properties, which could lead to an inability of cash flows sustaining property values.
Overall, Moody's forecasts a "preponderance" of positive rating actions for REITs over the next year, though they are not expected to continue at their recent pace.
