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DBRS turns Artis trend to negative
DBRS said it changed the trend to negative from stable and confirmed the issuer rating and senior unsecured debentures rating of Artis Real Estate Investment Trust at BBB (low).
The weaker trend reflects the ongoing EBITDA interest coverage deterioration beyond the agency’s prior year expectation of 2.7 times (x) or above because of the REIT’s high proportion of variable-rate debt.
“Morningstar DBRS anticipates a modest improvement in the coverage in the medium term as the REIT continues to execute its business transformation plan through monetizing assets and using the proceeds to repay further variable rate debt. However, Morningstar DBRS notes that, given the increased variable rate debt in an elevated interest rate environment and an already weakened coverage ratio, Artis has less cushion for the current leverage at the given rating level.
“Morningstar DBRS has also revised its assessment of the REIT’s portfolio size lower as the REIT continues to shrink in size following the asset dispositions carried out in the last 12 months ended (LTM) Sept. 30, 2023,” the agency said in a press release.
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