Moody's cuts Reckson to junk

Moody's Investors Service said it downgraded Reckson Operating Partnership LP's senior unsecured debt to Ba1 from Baa3 following the acquisition of Reckson Associates Realty Corp. by SL Green Realty Corp.

The rating remains under review for possible downgrade.

The downgrade reflects the agency's view that Reckson's bondholders are in a weaker position following the acquisition due to greater leverage and asset concentration and Moody's expectation that SL Green's current capital strategy, which utilizes high levels of secured debt, total effective leverage and joint venture funding, will not soon change.

Moody's said its continued review reflects its need to evaluate the quality of the unencumbered assets and cash flow left supporting the bonds once a final legal structure of the combined entity and its long-term strategic capital structure are known.

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