Fitch Ratings lowered its rating on SL Green's corporate debt, citing the New York City office giant's dipping ratio of unencumbered assets to unsecured debt.

The agency downgraded the office landlord’s issuer default rating to BB+ from BBB- and took the same measure with its subsidiary, SL Green Operating Partnership. The firm has had a UA/UD ratio below 2.0x since the beginning of the pandemic, the agency said, prompting the lowered rating. The ratio is around 1.2x. Fitch's outlook on the REIT is negative.

The downgrade comes despite the fact that SL Green, the largest owner of office properties in Manhattan, has a broad range of high-credit tenants on long-term leases and above-average occupancy rates.

Fitch expects the landlord to improve its credit ratio back to the 2.0 level, which would improve the negative outlook, The Real Deal reported. The agency had lowered SL Green's rating from BBB to BBB- last June.

The agency noted that in April, SL Green showed it has access to capital, even amid difficult financing environment, by the refinancing of 919 Third Ave. The company landed $500M from a group led by Aareal Capital and Credit Agricole Corporate and Investment Bank. It also sold a 49% stake in 245 Park Ave. to Japanese investment firm Mori Trust at a $2B valuation.

In May, SL Green was under review for a credit downgrade from Moody's Investors Service, although Moody's hasn't taken official action yet.

Fitch is taking a generally more bearish view of commercial real estate this year as restrictive interest rates have persisted. It lowered its assessment on the health of the industry back in June, resulting in the downgrade of a swath of banks with high concentration in CRE loans in recent weeks, CNBC reported.

SL Green isn't the only New York landlord ratings agencies are dinging. The Howard Hughes Corp.’s issuer credit rating was lowered from a B+ to a B by S&P Global last week, in part driven by continued losses at the South Street Seaport.