DBRS cuts RioCan Real Estate

DBRS said it downgraded the issuer, senior unsecured debentures and senior unsecured debentures, series I ratings of RioCan Real Estate Investment Trust to BBB from BBB (high). The agency also revised the trend to stable from negative.

“The downgrades largely reflect DBRS Morningstar's assessment of sustained deterioration in RioCan's financial risk profile that’s no longer consistent with a BBB (high) rating. The weakening financial risk profile reflects financial risk metrics and ongoing risks associated with its development strategy,” the agency said in a press release.

DBRS said it now projects RioCan’s total debt to EBITDA is 10.3 times (x) at year-end 2021, trending to the low 9x-range through 2023 (10.8x for the last 12 months at Sept. 30).

The revised forecast contrasts with the prior expectation for total debt to EBITDA below 10x by year-end 2021 and below 9.3x by year-end 2022, the agency said.

DBRS noted the contingent liabilities from RioCan’s debt guarantees of co-owner interests in development projects, a relatively short debt maturity ladder with a weighted average term to maturity of 3.7 years at Sept. 30, and the increased volatility of cash flows tied to the realization of profits in condominium projects.

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