Fitch downgrades Washington Prime

Fitch Ratings said it downgraded the ratings of Washington Prime Group, Inc. and its operating partnership, Washington Prime Group LP, including the long-term issuer default rating, to BB- from BB+.

The outlook is negative.

The agency also downgraded the company’s senior unsecured ratings to BB with recovery rating of RR2 from BB+ with recovery rating of RR4.

Fitch also said it estimates Washington Prime’s unencumbered asset coverage of unsecured debt at 1x under a stress scenario, which supports the RR2 recovery assumption.

The downgrades reflect the company’s higher leverage, stemming from continuing weakness in the company’s operating performance due to the secular shift in retail distribution toward e-commerce and omni-channel retailing, the agency said.

The shift is reducing tenant demand for physical space, particularly for less productive properties in weaker demographic trade areas, Fitch said.

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