Fitch downgrades EPR

Fitch Ratings said it downgraded EPR Properties’ rating, including the issuer default rating to BB+ from BBB-. Fitch lowered EPR’s senior unsecured rating to BB+ from BBB- and its preferred rating to BB- from BB.

“The ratings reflect revised Fitch assumptions under which EPR’s theater tenancy requires more substantial rent relief than Fitch originally contemplated in April 2020 to weather the effects of the coronavirus pandemic. EPR’s experiential real estate portfolio has been disproportionately impacted by health safety measures put in place to maintain social distancing and limit large gatherings, with theaters (approximately 45% of 4Q19 annualized revenue) among the tenant industries most severely impacted due to the coronavirus’ amplification of in-place secular trends that are highlighted by the disintermediation of theater screens as a distribution source for film content,” Fitch said in a press release.

The outlook is negative.

Moody’s assigns Franchise Group, notes B1

Moody’s Investors Service said it assigned first-time ratings to Franchise Group, Inc., including a B1 corporate family rating, a B1-PD probability of default rating and a B1 rating to its proposed $650 million senior secured notes.

Proceeds will be used to refinance Franchise Group’s debt, raise additional capital for general corporate purposes and pay transaction-related fees and expenses.

“Franchise Group’s B1 CFR reflects its moderate financial leverage, with estimated lease-adjusted debt/EBITDAR of around 3x and EBIT/Interest of around 2x for the latest twelve months ended June 30, 2020, pro forma for the full-year effect of recent acquisitions and the proposed refinancing transaction,” Moody’s said in a press release.

Concurrently, Moody’s said it assigned an SGL-2 speculative grade liquidity rating, reflecting its expectation for good liquidity.

The outlook is stable.

S&P rates Franchise Group, notes B+

S&P said it assigned B+ ratings to Franchise Group Inc. and its planned $650 million in senior notes to refinance its debt. The agency also assigned a 4 recovery rating.

“The B+ rating reflects our assessment of the company’s limited track record of operating multiple business segments offset by a manageable debt level and our expectation for decent free operating cash flow (FOCF) generation. The rating also incorporates our view of the company’s aggressive acquisition strategy that we expect will continue and presents inherent integration risks,” S&P said in a press release.

The agency gave the company a stable outlook. “The stable outlook reflects our expectation for improving EBITDA and cash flow generation as the company benefits from cost synergies from its recent acquisitions,” S&P said.

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