Moody's Downgrades Sun Communities

The ratings of Sun Communities Inc., a real estate investment trust based in Southfield, Mich., and its operating partnership have been lowered by Moody's Investors Service.The downgrades were as follows: Sun Communities preferred stock shelf, from (P)Baa3 to (P)Ba1; and Sun Communities Operating LP senior unsecured debt and debt shelf, from Baa2 to Baa3, and subordinate debt shelf, from (P)Baa3 to (P)Ba1. The ratings remain under review for possible downgrade. Moody's said the rating actions are based on Sun's announcement of a tender offer to buy all outstanding senior unsecured notes at par value (plus a specified spread) with proceeds from the issuance of longer-term debt secured by the REIT's housing communities. "This rating action also reflects management's decision to change the REIT's capital structure to a primarily secured debt financing strategy with high leverage, and a low unencumbered portfolio," Moody's said. In connection with the tender offer, Sun is soliciting consents to a proposed amendment to the indenture governing the notes that would "eliminate substantially all of the restrictive covenants under the indenture and the notes," the rating agency said. Moody's can be found online at http://www.moodys.com.