DBRS Canadian REIT and REOC Study Shows Adequate Liquidity Positions
According to a DBRS study published today, Canadian real estate investment trusts (REITs) and real estate operating companies (REOCs) have adequate liquidity positions; however, the shape of the economic recovery will determine the future prospects. “DBRS-rated REITs and REOCs made good progress in improving their balance sheet flexibility and liquidity positions through a flurry of financing activity starting in Q2 2009,” says Mark Newman, Vice President. “They were fairly active in Q2 2009 and Q3 2009 with debt and equity issuances, following several quarters of minimal or no activity.”
DBRS attributes this to the following:
– Unthawing of the credit markets with the return of the investor class.
– Indications of a global economic recovery.
– Solid underlying quality of real estate portfolios rated by DBRS.
– Comparatively good operating fundamentals and improving financial flexibility for DBRS-rated REITs and REOCs.
Going forward, DBRS expects the credit profiles of DBRS-rated REITs and REOCs to remain mostly stable through 2010. The stable outlook largely reflects the fact that refinancing risks are manageable and current financial flexibility is adequate to offset the modest pressure on property-level cash flow and operating metrics caused by a challenging operating environment.
If you are interested in receiving a copy of this study, please email info@dbrs.com.