The preferred stock of Chicago-based AMLI Residential Properties Trust has been downgraded from Ba2 to Ba3 by Moody's Investors Service and the senior unsecured debt of its operating partnership, AMLI Residential Properties LP, has been downgraded from Baa3 to the non-investment-grade rating of Ba1.The rating outlook is stable. Moody's said the rating actions stem from AMLI's earnings weakness and "moderate deterioration" in credit measures. "The key rating driver was the enduring supply-and-demand imbalance in AMLI's markets, which continue to pressure the [real estate investment trust's] property net operating income and, as a consequence, fixed-charge coverage," the rating agency said. "This trend was exacerbated by the higher levels of leverage and secured debt relative to its Baa3-rated peers, as well as the significant level of joint ventures." Moody's added, however, that the REIT has taken "positive steps in enhancing its balance sheet with unsecured debt, a portfolio of superior quality apartment properties, and efforts to simplify its structure by buying in and unencumbering several of its joint venture properties." Moody's can be found online at http://www.moodys.com.

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