DBRS reviews Choice

DBRS said it placed the BBB issuer and senior debt ratings of Choice Properties REIT under review with developing implications.

The agency said the review is directly related to its review of the ratings of Loblaw Cos. Ltd. that follows Loblaw's announcement of an offer to acquire the shares of Shoppers Drug Mart Corp. for C$12.4 billion and the assumption of about C$1 billion of debt.

DBRS said Choice's ratings are equivalent to those of Loblaw because Loblaw owns and controls over 80% of Choice, Loblaw is Choice's most significant tenant for the foreseeable future, Choice's portfolio of properties represents about 75% of Loblaw's owned real estate and its leases with Loblaw have a weighted average remaining lease term of 14 years.

The transaction would not materially affect the above factors, so Choice's ratings will remain equivalent to the ratings of Loblaw, and the review will be resolved once Loblaw's review is resolved, the agency said.

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