DBRS Limited (DBRS Morningstar) assigned ratings of BBB with Stable trends to Dream Industrial Real Estate Investment Trust’s (Dream Industrial or the REIT) $200 million re-opening of the 1.662% Series A Senior Unsecured Debentures, Due December 22, 2025 (the Series A Re-Opening Debentures), $200 million Floating Rate Series B Senior Unsecured Debentures, Due June 17, 2024 (the Series B Debentures), and $400 million 2.057% Series C Senior Unsecured Debentures, Due June 17, 2027 (the Series C Debentures, together with the Series A Re-opening Debentures and the Series B Debentures, the Debentures). The ratings being assigned are based upon the rating of an already-outstanding series of the Senior Unsecured Debentures.
The Debentures are direct senior unsecured obligations of Dream Industrial and rank equally and rateably with all other senior unsecured debt securities of the REIT, and with all other unsecured and unsubordinated indebtedness of Dream Industrial, except to the extent prescribed by law. The Debentures are guaranteed, on an unsecured basis, by Dream Industrial LP, a subsidiary of the REIT, as well as those subsidiaries of the REIT that are guarantors under Dream Industrial’s unsecured credit facilities.
DBRS Morningstar understands the net proceeds from the offering will be used to fund a portion of the purchase price for the European Acquisition (as further described in DBRS Morningstar’s press release on June 2, 2021) and with respect to the Series C Debentures, will also be used to finance and/or refinance Eligible Green Projects under the REIT’s Green Financing Framework. A portion of the net proceeds may also be used to repay existing indebtedness.
DBRS Morningstar further understands that the Series B Debentures and the Series C Debentures are subject to a special mandatory redemption provision in the event that the European Acquisition does not close and that Dream Industrial plans to convert all of the proceeds of the offering into euros through cross-currency interest rate swap arrangements to lower the effective interest rate on each series of the Debentures.
DBRS Morningstar notes that after accounting for the Series A Re-Opening Debenture offering, an aggregate of $450 million of the 1.662% Series A Senior Unsecured Debentures, Due December 22, 2025, is outstanding.
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.
All figures are in Canadian dollars unless otherwise noted.
The principal methodologies are Rating Entities in the Real Estate Industry (April 23, 2021; https://www.dbrsmorningstar.com/research/377358) and DBRS Morningstar Criteria: Guarantees and Other Forms of Support (May 31, 2021; https://www.dbrsmorningstar.com/research/379424), which can be found on dbrsmorningstar.com under Methodologies & Criteria. Other applicable methodologies include the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (February 3, 2021; https://www.dbrsmorningstar.com/research/373262).
For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.
Generally, the conditions that lead to the assignment of a Negative or Positive trend are resolved within a 12-month period. DBRS Morningstar trends and ratings are under regular surveillance.
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