S&P downgrades Tishman Speyer

Standard & Poor's said it lowered Tishman Speyer Real Estate D.C. Area Portfolio (Borrower) LP's corporate credit rating to D from CCC and its $570 million of senior bank loans to D with an unchanged recovery rating of 4.

The downgrade reflects the partnership's failure to pay interest due on July 22 and its subsequent failure to cure the payment default within the permitted grace period, the agency said.

No formal forbearance agreement is currently in place, but the lenders have not demanded payment of the principal balance as a result of the interest payment default. Negotiations to modify the credit agreement continue.

S&P believes the partnership's ability to comply with current financial covenants beyond the end of 2009 is in jeopardy. In the agency's view, a meaningful infusion of additional equity capital into the partnership will be necessary as part of any recapitalization.

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