DBRS Confirms Choice Properties Limited Partnership and Choice Real Estate Investment Trust at BBB, Stable

DBRS Limited (DBRS) has today confirmed the Issuer Rating and Senior Unsecured Debenture rating of Choice Properties Limited Partnership (CPLP) and the Senior Unsecured Debenture (guaranteed by CPLP) rating of Choice Properties Real Estate Investment Trust (collectively, Choice Properties or the Trust) at BBB, all with Stable trends.

The ratings continue to be based on DBRS’s view that the credit risk profiles of Choice Properties and Loblaw Companies Limited (Loblaw; rated BBB with a Stable trend by DBRS) are aligned. See the Loblaw rating report dated March 25, 2015, for rating considerations. The alignment is primarily a result of the following: (1) Loblaw owns and controls 82.9% of Choice Properties as at December 31, 2014 (YE2014). In addition, George Weston Limited (rated BBB with a Stable trend), the parent of Loblaw, owns approximately 5.4% of outstanding units; (2) Loblaw is Choice Properties’ most significant tenant, representing approximately 91.4% of annual base rent and 88.4% of its gross leasable area (GLA) as at YE2014; (3) Choice Properties’ portfolio of properties represents approximately 85% of Loblaw’s total owned real estate on a GLA basis (Loblaw retains direct ownership of approximately seven million square feet of GLA); and (4) Choice Properties’ leases with Loblaw have a weighted-average remaining lease term of 12.7 years as at YE2014.

Choice Properties’ credit risk profile could begin to be assessed on a stand-alone basis if Loblaw’s ownership and/or control in the Trust diminish materially over time. The rating of Choice Properties could also move independently of Loblaw, without a meaningful reduction of ownership by Loblaw, should the Trust materially grow and diversify its tenant base over the longer term. DBRS believes Choice Properties possesses attributes of an investment-grade profile on a stand-alone basis (i.e., size, asset quality, geographic diversification, financial leverage and interest coverage), but notes the Trust’s rating cannot exceed Loblaw’s credit rating should Loblaw remain the predominant tenant. DBRS has provided a summary of its analysis (qualitative attributes, earnings profile, financial profile, etc.) of Choice Properties for those interested in the Trust on a stand-alone basis, which follows in the remainder of this report.

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.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The applicable methodologies are Rating Entities in the Real Estate Industry (October 2013), Rating Companies in the Merchandising Industry (January 2015) and DBRS Criteria: Guarantees and Other Forms of Explicit Support (February 2015), which can be found on our website under Methodologies.

The full report providing additional analytical detail is available by clicking on the link under Related
Research at the right of the screen or by contacting us at info@dbrs.com.