The rating upgrade largely reflects (1) Allied's transition to a predominately unsecured debt capital structure with a secured debt-to-total debt ratio comfortably below 40% on a sustained basis as the Trust aims to fund maturing mortgages and, in some cases, prepay mortgages with unsecured debt; (2) the Trust's growing portfolio of quality unencumbered assets valued at approximately
DBRS Morningstar estimates that Allied's current secured debt-to-total debt ratio is approximately 38% (including guaranteed third-party construction debt) after the Trust issued the 3.113% Series E Senior Unsecured Debentures and prepaid
On
DBRS Morningstar will consider a further rating upgrade within the next 12 months if Allied can continue to prudently fund its acquisition and development program, such that DBRS Morningstar can comfortably expect key financial risk metrics to remain satisfactory for the rating on a sustained basis; and commit to upgrading the Trust's portfolio asset quality through its acquisition and development program and stabilizing completed developments, thereby reducing leasing and development risks. DBRS Morningstar is not contemplating a negative rating action at this time, given Allied's improved forward-looking key financial risk metrics and low proportion of secured debt in the debt capital structure, among other positive factors.
Notes:
All figures are in Canadian dollars unless otherwise noted.
The principal methodologies are Rating Entities in the Real Estate Industry and DBRS Morningstar Criteria: Rating Corporate Holding Companies and Parent/Subsidiary Rating Relationships, which can be found on dbrs.com under Methodologies & Criteria.
The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info@dbrs.com.
The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.
For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.
Ratings
Date Issued Debt Rated Action Rating Trend Issued
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CA = Canada Issued, NRSRO
EU = EU Issued, NRSRO
E = EU endorsed
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04-Dec-19 Senior Unsecured Debentures Upgraded BBB Pos CA
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