Moody's: B.F. Saul view negative

Moody's Investors Service said it changed the outlook on B.F. Saul Real Estate Investment Trust (issuer rating Ba2) to negative.

Moody's said the change in outlook reflects the deteriorating prospects for the company's financial metrics due to the stress on subsidiary Chevy Chase's mortgage banking business because of non-conforming residential mortgage-backed securities.

The agency said Chevy Chase's asset quality indicators are good, and its liquidity and capital adequacy profiles are sound. Moody's said that further deterioration in Chevy Chase's and the industry's residential mortgage asset quality indicators is likely as the downturn in the housing market unfolds, particularly if it is accompanied by rising unemployment. Some deterioration in these asset quality indicators has already been factored into Moody's ratings, the agency said.

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