Moody's downgrades iStar

Moody's Investors Service said it downgraded iStar Financial Inc.'s senior unsecured debt rating to Baa3 from Baa2 and its preferred stock to Ba2 from Ba1.

The outlook remains negative.

The downgrade follows the announcement by the REIT of increased loan provisions of $275 million expected in the second quarter. Moody's said it expects iStar's non-performing assets and core earnings to continue to be pressured over the near term given the persistent instability of the credit markets.

The negative outlook reflects this instability and the weakening economic environment, the agency added.

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