Fitch Cuts Developers Diversified Realty Ratings

NEW YORK (AP) — Fitch Ratings downgraded several ratings on Developers Diversified Realty Corp. on Friday, citing the shopping center developer's liquidity position.

Fitch downgraded Developers Diversified's issuer default rating, $1.3 billion in unsecured revolving credit facilities, $1.4 billion in unsecured medium-term notes and $833 million in unsecured convertible notes one notch to "BBB-" from "BBB." The new rating is Fitch's lowest investment-grade rating.

Fitch also downgraded $555 million in preferred stock to "BB+" from "BBB-," sending it into non-investment grade, or "junk," status. It assigned a negative outlook to the new ratings, implying another downgrade could be forthcoming.

Fitch said the recent purchase of 30 million of Developer Diversified common shares and warrants by the Otto family would improve its capital position upon its completion, but several credit metrics remain unworthy of higher ratings.

Fitch also said the company would have a liquidity shortfall of $300 million through the end of 2010 due to limited availability under the company's revolving credit facilities and debts coming due in 2010.

Last week, the company was removed from the Standard & Poor's 500 Index due to a low market capitalization.

Shares of Developers Diversified Realty fell 23 cents, or 9.3 percent, to $2.25 in morning trading.