DBRS lowers First Capital unsecured notes

DBRS said it downgraded the rating of First Capital Realty Inc.’s senior unsecured debentures to BBB from BBB (high) following the closing of the company’s debt-financed repurchase for cancellation of C$742 million common shares from Gazit-Globe Ltd.

This action resolves negative review status on the company that began in March, DBRS said.

The agency said it is changing the status to "developing" review until it reviews legal documentation evidencing First Capital’s previously announced conversion to a real estate investment trust.

The downgrade reflects First Capital’s elevated leverage as measured by a total debt-to-EBITDA ratio that is expected to peak at 11.6x immediately following close of the share repurchase transaction, DBRS said.

The ratings are supported by the company’s stable portfolio of supermarket- and drugstore-anchored retail properties, leading market position within its core trade areas, resilient tenant base, development capabilities and low proportion of secured debt, the agency said.

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