DBRS Assigns Issuer Rating of AA (low) to OMERS Realty Corporation, Stable Trend

DBRS has today assigned an Issuer Rating of AA (low) with a Stable trend to OMERS Realty Corporation (ORC or the Company).

ORC’s rating reflects the following credit strengths: (1) strong ownership (OMERS Administration Corporation, rated AAA by DBRS) and corporate governance; (2) a high-quality portfolio featuring several of Canada’s preeminent enclosed shopping centres and office buildings; (3) conservative financial leverage and good financial flexibility enhanced by a sizable unencumbered asset pool; and (4) diversity by asset segment and tenant base. The rating also considers the following challenges: (1) a high degree of geographic concentration in Toronto and Calgary; (2) significant property concentration; and (3) considerable exposure to the office segment.

The Stable trend reflects DBRS’s expectation that ORC will continue to deliver steady growth in net rental income and EBITDA in the near-to-medium term based mainly on higher average rental rates on leasing activity in the retail and office segments of the portfolio. Leasing activity should also benefit from a limited amount of new supply expected in the Company’s core markets and overall robust fundamentals across each of ORC’s asset segments. In addition, ORC’s high-quality commercial real estate assets and stable residential portfolio should support portfolio metrics and the Company’s earnings profile going forward.

While DBRS does not anticipate significant acquisition activity in 2013, mainly due to a highly competitive real estate market, the Company has the debt capacity and financial flexibility to take advantage of attractive property investment opportunities that may arise over the medium term. DBRS expects the Company will manage dividends and/or return of capital to OMERS in a manner that will keep credit metrics and financial flexibility consistent with the current rating category.

Notes:
All figures are in Canadian dollars unless otherwise noted.

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 to the right under Related Research or by contacting us at info@dbrs.com.

The applicable methodology is Rating Real Estate Entities, which can be found on our website under Methodologies.