Moody's Downgrades EOP, EOPT

The long-term debt ratings of EOP Operating LP have been lowered from Baa1 to Baa2 by Moody's Investors Service, and its ratings of Equity Office Properties Trust's preferred stock have been lowered from Baa2 to Baa3.The rating agency said the downgrades reflect "the erosion in the company's operating performance in recent years, resulting in cash flow levels insufficient to cover its dividend obligations and a moderate decline in key debt protection measures." Moody's said recovery in the U.S. office markets will be "slow and uneven," but added that the company's declining performance stems only in part from the cyclical downturn. Its operating results "have been pressured by the lack of preparedness in its internal operational infrastructure to manage through the weakening operating environment, unanticipated tenant credit quality challenges, and overexposure to highly correlated markets," the rating agency said. Moody's added that the company has taken action to strengthen its operational infrastructure. The rating agency can be found online at http://www.moodys.com.