Moody's Downgrades Colonial Realty

NEW YORK (AP) — Moody's Investors Service on Tuesday lowered the ratings of Colonial Realty Limited Partnership and Colonial Properties Trust on concerns about its high debt levels and slowed growth in the difficult economy.

Colonial Properties Trust is a real estate investment trust based in Birmingham, Ala., that owns and manages properties located in Sunbelt states, with a focus on multifamily sites.

Moody's downgraded the ratings on the partnership's senior debt to "Ba1" from "Baa3" and the preferred stock rating for the trust to "Ba2" from "Ba1". The outlook remains negative.

Moody's said the downgrade reflects Colonial's increasing debt levels and lower leasing levels of its properties. Colonial Properties has significantly reduced its development pipeline, which Moody's saw as a positive but the rating agency anticipates declines in earnings in the near-term.

The trust could also face pressure managing its financial covenants depending on the severity of the economic decline.

Moody's noted that it does believes that Colonial Properties has adequate liquidity to meat its funding needs through 2010, and is further enhanced by its recent $350 million secured financing provided by Fannie Mae and its previously announced dividend cut.