Fitch Ratings Revises Kramont's Rating Outlook to Stable.

Business Editors

NEW YORK--(BUSINESS WIRE)--July 2, 2003

Fitch Ratings has affirmed the 'BB-' rating on the 9.75% series B-1 convertible preferred stock and the 9.5% series D Perpetual Preferred Stock issued by Kramont Realty Trust (NYSE: KRT). The Rating Outlook has been revised to Stable from Negative.

Fitch's Outlook revision follows a series of positive developments that have taken place since the assignment of the Negative Outlook in January 2002, including KRT's recent closing of a $190 million mortgage financing, a $125 million senior secured credit facility refinancing, $61 million (net proceeds) in common stock issuance and the formation of the company's first joint venture, all of which have broadened KRT's sources of capital. Earnings stability of the portfolio has also improved with the signing of good-quality tenants, such as Wal-Mart, Kohl's and Redner's Supermarket, offsetting occupancy lost through store closings and lease rejections by Kmart, Ames and Cub Foods.

As a result of these financing activities, leverage has improved from January 2002 levels to 70% of undepreciated book capitalization on a debt-plus-preferred basis from 76% previously. Moreover, net operating income (NOI) contributed from unencumbered properties has risen from a near-zero level to offer a partial offset to preferred dividend distributions, although, going forward, a portion of this unencumbered NOI may be traded away through dispositions of non-core assets. Due to the roughly $3.3 million in annual interest savings from the mortgage financing, fixed charge coverage is also expected to rise to a pro forma 1.8 times (x) (adjusted for straight-line rents, capital expenditures and preferred dividends) from 1.5x in 2001.

Despite the considerable improvement in financial flexibility, including the lengthening of debt maturities, funding requirements on committed projects will continue to stress KRT's access to capital. Upcoming capital expenditures related to two new development projects, nine ongoing redevelopment properties and regularly scheduled lease rollovers will be only partially covered by near-term funds from operations (FFO). Other expected funding sources, which include cash balances on hand of $9 million, property-level construction financing and additional draws on the $26 million in remaining credit line availability (subject to a $65 million borrowing base limitation), stand barely adequate to cover the remainder of funding needs. Furthermore, until this new development and repositioning activity can yield positive NOI results, increased interest carry will weigh down coverage ratios.

Fitch regards KRT's growth strategy, which targets the repositioning of poorly performing assets in well-located markets, as fundamentally more stable and less capital-intensive than the pure ground-up development model pursued by many of the company's peers. Nonetheless, KRT's small capitalization and substantially encumbered asset base, both of which significantly constrain its access to capital, underscore the need for a very careful monitoring of the firm's financial flexibility. Ratings are expected to remain at their current level until KRT can demonstrate either an increase in its pool of unencumbered assets or a further reduced debt load on the properties that remain encumbered.

Headquartered in Plymouth Meeting, PA, Kramont is an $800 million (undepreciated book capitalization) owner, manager, developer and redeveloper of neighborhood and community shopping centers located primarily in the Mid-Atlantic, Northeast and Southeast regions. The largest market concentrations on an NOI basis include Philadelphia (26%), Allentown-Bethlehem, PA (13%), New York City (9%) and Atlanta (7%). As of March 31, 2003, KRT's portfolio consisted of 80 shopping centers, two office properties and an additional five centers operated on a third-party management basis, representing a total of 11.5 million square feet.