Fitch cuts Reckson to junk

Fitch Ratings said it downgraded Reckson Operating Partnership, LP's issuer default rating, senior unsecured notes and senior unsecured convertible notes to BB+ from BBB- in anticipation of the upcoming consummation of SL Green Realty Corp.'s merger with Reckson Associates Realty Corp.

The ratings remain on Rating Watch negative.

The agency said the downgrade centers on the expected decline in EBITDA coverage following the sale of Reckson Associates' Long Island and New Jersey office properties to an investor group that includes Reckson senior management after the merger and the weakening of liquidity and financial flexibility due to the retirement of Reckson's unsecured revolving credit facility.

Fitch acknowledged that SL Green has the ability to use its access to unsecured borrowings via its revolving credit facility and term loan facilities to service Reckson debt. Furthermore, Reckson's geographic concentration increases after the sale of assets to the investor group, reducing Reckson 's property portfolio footprint to office properties in only New York, Connecticut and Westchester, New York.

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