DBRS Notes Closing of Reliance Acquisition by Cheung Kong Property Holdings Limited

DBRS Limited (DBRS) today notes that on July 13, 2017, Cheung Kong Property Holdings Limited completed its acquisition of Reliance LP (rated BBB (low) with a Stable trend by DBRS) and Reliance Intermediate Holdings LP (rated BB with a Stable trend by DBRS; together, the Companies) from Alinda Capital Partners (the Transaction). As previously noted, DBRS does not expect the Transaction to result in material changes to the operations of the Companies but expects that the more flexible distribution policy going forward could reduce the need for additional external debt financing, which should help relieve pressure on the Companies’ key credit metrics (see the press releases “DBRS Confirms Reliance LP at BBB (low) with a Stable Trend” and “DBRS Confirms Reliance Intermediate Holdings LP at BB with Stable Trends” dated May 1, 2017, for more details).

Notes:
The principal methodology is Rating Companies in the Consumer Products Industry (September 2016), which can be found on dbrs.com under Methodologies. However, DBRS views the Companies’ strong franchise as having a superior business risk profile than that of a traditional consumer products company. As a result, the Companies are able to manage higher leverage metrics.

Overall, in DBRS’s assessment of the credit quality of the Companies, DBRS factors in the following key items: (1) competition arising from regulatory changes, (2) effects of attrition on customer base, (3) stability of cash flow generated from customer base, (4) flexibility to increase rental rates and (5) dependency on new home developments for growth.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.