Moody's Downgrades WCI

The ratings of WCI Communities Inc., a Bonita Springs, Fla.-based homebuilder and the parent company of WCI Mortgage, have been lowered from B1 to B2 by Moody's Investors Service, and its senior subordinated notes have been downgraded from B3 to Caa1.The ratings outlook remains negative. The downgrades were triggered by WCI's "persistently unfavorable performance vs. expectations in 2006 and Moody's concern that this underperformance may last for much of 2007." The rating agency said WCI's cash collections were hurt in the fourth quarter by delays in construction, in receipt of certificates of occupancy, and in getting buyers to closings, as well as by higher cancellation rates. Moody's said WCI's ability to reduce debt leverage from its "unacceptably high" rate of nearly 67% to its target rate of 50%, and its ability to comply with financial covenants in its credit facilities, will be "greatly challenged." WCI can be found online at http://www.wcicommunities.com.