These rating actions reflect DBRS Morningstar's expectation that the announcement of Artis' current management team leaving the REIT may have a negative impact on its credit risk profile and may impair its ability to reduce leverage in a timely manner.
Artis announced an agreement through which certain members of the management team, including the chief executive officer (CEO) and the chief financial officer (CFO), are stepping down as a result of activist unitholder (the
As a result of the uncertainty created by the change in management, DBRS Morningstar is placing Artis' ratings Under Review with Negative implications. As part of its review, DBRS Morningstar will determine the new management team's commitment to and updated plans for lowering leverage. Should DBRS Morningstar determine that the REIT's successful reduction of leverage is likely, DBRS Morningstar would likely change the trend for Artis' ratings to Stable upon completion of the review. Conversely, DBRS Morningstar would likely take a negative rating action on Artis' ratings should it determine that management is unlikely to reduce total debt-to-EBITDA ratio below 9.8 times (x) or increase EBITDA interest coverage above 2.70x.
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at: https://www.dbrsmorningstar.com/research/357792.
Notes:
All figures are in Canadian dollars unless otherwise noted.
The principal methodologies are Rating Entities in the Real Estate Industry (
For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.
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@dbrsmorningstar.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.
Generally, the conditions that lead to the assignment of a Negative or Positive trend are resolved within a 12-month period. DBRS Morningstar trends and ratings are under regular surveillance.
For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.
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Ratings
Date Issued Debt Rated Action Rating Trend Attributes
i
US = Lead Analyst based in USA
CA = Lead Analyst based in
EU = Lead Analyst based in EU
E = EU endorsed
U =
Unsolicited Participating With Access
Unsolicited Participating Without Access
Unsolicited Non-participating
17-Dec-20 Issuer Rating UR-Neg. BBB (low) -- US
17-Dec-20 Senior Unsecured Debentures UR-Neg. BBB (low) -- US
17-Dec-20 Preferred Trust Units UR-Neg. Pfd-3 (low) -- US
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