S&P cuts Retirement Residences to junk

Standard & Poor's said it assigned a BB long-term corporate credit rating to Retirement Residences REIT and lowered all ratings on the secured mortgage bonds to BB from BBB.

The outlook is stable.

The secured mortgage bond ratings had been placed on CreditWatch as a result of the announced plan to acquire 50% of Lifestyle Retirement Communities Ltd. with 100% debt financing, a combination of assumed property debt and a convertible debenture issue.

The corporate rating reflects the more aggressive leverage in the REIT, the decline in occupancy and net operating income from the trust's portfolio of Ontario-based retirement facilities, and the pace of acquisitions.

S&P said it is concerned with the added financial risk assumed by the trust during a time of softening fundamentals.

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