Fitch Praises REIT Servicers.(Real estate investment trusts)(Brief Article)

New York -- While mortgage REITs face several obstacles to obtaining high marks from rating agencies, having a capable loan servicing unit can help ease the concerns of a rating agency, according to a recent report from Fitch Ratings.

While saying there is no "cap or floor" on the ratings a mortgage REIT can obtain, Fitch Ratings says that capital retention and shareholder return factors will likely limit the rating upside to the 'A' range from an economic standpoint.

Funding diversity, liquidity and unencumbered assets also tend to be obstacles that REITs face in trying to achieve high ratings. Higher ratings are desirable because they generally reduce a company's cost of debt.

Fitch also praises mortgage issuers that have a loan servicing capability, calling servicers and special servicers "the backbone of the mortgage REIT industry.

"Fitch believes that issuers with a servicing capability may have a marginally to significantly more defensible ...