Chartwell Retirement Residences: Rating Report

On October 11, 2019, DBRS Limited (DBRS Morningstar) confirmed the Senior Unsecured Debentures rating of Chartwell Retirement Residences (Chartwell or the Trust) at BBB (low) with a Stable trend. The rating confirmation is based on high property and tenant diversification, good tenant quality and Chartwell’s leading position in the Canadian seniors’ housing industry, which is supported by the quality of its seniors’ housing portfolio, offering of seniors’ housing accommodation (retirement and long-term care (LTC)) and health-care services, resulting in cash flow stability. The rating is constrained by rising leverage, Chartwell’s significant geographic concentration in the Province of Ontario (Ontario; rated AA (low) with a Stable trend by DBRS Morningstar), a relatively short lease maturity profile compared with other real estate issuers rated by DBRS Morningstar, the competitive nature of the retirement sector (excluding LTC) and a labour-intensive cost structure.