The Negative Outlook centers on the current weak leverage and coverage metrics for the rating category, and the uncertainty inherent in future equity raises. Absent significant delevering transactions occurring between now and 2011, Fitch would view the company's credit profile more consistent with a lower rating.

"We have identified Nashville as a market where we want to grow," said John Shannon, Senior Vice President of Operations. "It is an exciting town which has provided remarkable support to Associated Estates and Merit during the pre-development process. The diverse economic base and solid demographic trends in Nashville should bode well for the apartment market for years to come. Merit will be able to provide important construction efficiencies for this urban infill development," Shannon added.