Author: David Pett

RBC Capital Markets analyst Neil Downey says Brookfield Properties Corp. has made its first purchase outside of North America.

“A press release from Great Portland Estates plc has noted that it has sold a 50% interest in The 100 Bishopsgate Partnership for 43 million British pounds in cash,” said Mr. Downey.

The interest in the 100 Bishopsgate development site in the centre of London is being set up as a joint venture, said Mr. Downey. The two acre site received planning consent in May, 2008 and a 40 storey building with 770,000 square feet of office, retail and a new public library is planned. A second of building of 49,000 square feet planned.

The joint venture calls for Brookfield and Great Portland to share capital expenditures, income and expenses.

“On a 100% basis, the existing gross leasable area has in-place net rent of 7.4 million pounds per year,” said Mr. Downey, saying that means about an 8.5% yield.

“We believe this rent will erode after one-year, but BPO/GPE’s goal is to begin construction as early as mid-2011.  Central London office rents probably have to move somewhat higher, in our view, in order to generate an acceptable development yield.”

Garry Marr

Lots of investment newsletters and blogs are talking up the merits of Vodafone Group PLC, the global cell phone carrier. I’m skeptical. But before explaining why, let me outline the bull’s case.

The argument for Vodafone begins with the fact it’s cheap. It trades for less than book value and for about 14 times earnings.

David Einhorn of Greenlight Capital believes Vodafone’s 45% stake in Verizon Wireless, the US cellular company, represents a potential catalyst for the stock. He thinks Vodafone is likely to start collecting a substantial dividend from Verizon in 2012.

Vitaliy Katsnelson of Investment Management Associates likes Vodafone’s relatively modest debt and its diversified portfolio of cellular holdings, which includes a 3.2% stake in China Mobile. (The Market Folly blog contains a point-by-point summary of Katsnelson’s case for Vodafone.)

So why can’t I get excited about Vodafone? It seems to me that cellular companies all face the same problem: they’re offering a service that is hard to differentiate from competitors’ offerings. One phone call is much like another. No consumer has ever exclaimed with delight at having his call handled by Carrier A and not Carrier B.

A cell company can try to stand out by investing billions in building a superior network, but even such massive capital projects offer only limited relief from competition. Eventually your rivals will match whatever you have in place.

The most likely future for cellular firms is one of relentless competition and dwindling profits. Vodafone is a fine company, but it can’t escape the gravitational field of its industry. Dividend investors may want to sign up for its lush yields, but if so, why not go for the biggest yield possible? For my money, I prefer BCE Inc., with its 5.7% dividend yield, to Vodafone, with its 3.7% yield.

Freelance business journalist Ian McGugan blogs for the Financial Post. 

If you own Citigroup Inc. shares, think about selling. If you were planning on buying, then consider holding off for a while.

That's the recommendation of Ken Norquay, chartered market technician, CastleMoore Inc., on news that the U.S. Treasury will start selling its 25% emergency stake in the U.S. bank.

He said one of the most important influences on any stock’s price is the presence of a large seller or buyer in the market. In this case, it makes sense for new investors to postpone their Citibank stock purchases to see if the U.S. Treasury's sale plans drive the price lower.  

"After all, if the share price were to go up, the US treasury would flood the market with its 7.7 billion shares and cool the price back down," he said in newsletter to clients. 

"The risk that a new investor in Citibank will miss out on a big rise in the price of the stock vanished when the treasury announced their sale. The real risk is that government selling will drive the price lower."

As for investors who currently own the stock, Mr. Norquay thinks most will sell now, before the government sells. 

"This week’s announcement has put a lid on the price of Citibank shares until the government’s selling program is complete."

David Pett 

U.S. technology and healthcare stocks are well positioned to benefit in an environment of rising interest rates, according to a new Standard & Poor's report.

Sam Stovell, chief investment strategist for equity research, said the U.S. Federal Reserve has tighten monetary policy 13 times since 1946.

On average, U.S. equities climbed 7.3% in the 12-month period following the first rate hike, which is 100 basis points below the overall performance of stocks over the 64-year period. Performance was particularly sluggish in the first six months, however the S&P 500 only fell 31% of the time in the year after the Fed started to raise rates,  Mr. Stovall's research concluded.

The best performing sectors have been information technology and healthcare. Tech stocks climbed 20% on average and outperformed the broader index 69% of the time. Healthcare stocks climbed 13% and outpaced the market 54% of the time. The worst performing sectors, meanwhile, were materials and financials.  

S&P recommended investors overweight both technology and healtcare stocks as the Fed moves closer to raising rates later this year or early next. In particular, they mentioned Computer Sciences Corp., Gilead Sciences Inc., International Business Machines Corp., MEMC Electronic Materials Inc., Western Digital Corp. and Yahoo! Inc.

David Pett 

Given the choice between investing in Canadian or U.S. banks over the past year, most investors have not hesitated in choosing the former option.

But now that Canadian banks have all but erased their losses from the financial crisis in 2007 and 2008, their counterparts south of the border who have not are looking like a better bet, says John Aiken, analyst, Barclay's Capital Markets.

"Given that we anticipate some resistance at current levels and the fact that the Canadian banks have already generated significant valuation multiple expansion, we continue to believe that the U.S. banks provide greater upside in an economic recovery scenario," Mr. Aiken said maintaining his Neutral rating on all six major Canadian banks.

Last week, shares in Toronto Dominion Bank hit a record high $76.50, becoming the first Canadian bank to fully recouped its lost share value during the financial crisis. The country's five remaining major banks have also rallied hard this past year and are only 5% off their 52-week highs.

Mr. Aiken, one of Canada's most bearish bank analysts, said the 99% increase in bank shares over the past 12 months has been generated primarily on multiple expansion, with the group's price/earnings ratios increasing four multiple points over the year.

The U.S. banks have not benefitted to the same degree as the Canadian banks from multiple expansion, he said. 

More recently, Canadian banks have drummed up higher earnings expectations, however, valuations remain stretched, the analyst said, trading at an average of almost 13x consensus forward earnings for 2010 and a 2.2x price-to-book.

Mr. Aiken said additional multiple expansion for the Canadian banks will be hard to achieve and share price growth will have to rely on an increasingly positive earnings outlook. 

"While Bank of Montreal and CIBC, the banks that arguably are benefitting from the best year-to-date momentum, have significant room before they hit any technical resistance related to new valuation levels, the group overall may face some difficulty surpassing current valuations," he wrote.

David Pett 

Shares in Domtar Corp. are up 3% Tuesday morning, following news Monday that it has agreed to sell their forest products business to Vancouver-based EACOM Timber
Corporation.

The transaction is valued at $80-million plus working capital estimated at between $30-million and $40-million.  It is expected to close in June and involves five operating sawmills in various
regions of the country, including Timmins, Nairn Centre and Gogama in Ontario, and Val-d'Or and Matagami in Quebec.

Two non-operating sawmills at Ear Falls in Ontario and Ste-Marie in Quebec are also included in the deal.

Raymond James analyst Daryl Swetlishoff upgraded his rating on Domtar stock to Strong Buy from Outperform and increased his price target to $80 from $75.

"We are positive on the sale as historically these assets have been economically challenged and diverted managementʹs focus from the core white paper business," he said in a note to clients. 

The analyst said Domtar will likely divest other non-core assets over time, better enabling the company to meet its $1.1-billion net debt target.

"Aside from positive valuation implications we view the deleveraging as allowing Domtar the flexibility to expand its core paper or merchants businesses and returning cash to shareholders with a dividend reinstatement," Mr. Swetlishoff said. 

David Pett 

U.S. equity index futures are slightly higher this morning. S&P 500 futures added 1 point in pre-opening trade.

S&P 500 futures were virtually unchanged following release of the January Case/Shiller home price index. Consensus for the 20 largest U.S. cities was a decline of 0.6% on a year-over-year basis. Actual was a decline of 0.3%.

More evidence that Canada’s economy is on the road to recovery! Honda Canada announced plans this morning to rehire 400 workers.

Verizon gained 2% after Apple announced its intentions to launch a new version of iPhone that can operate on Verizon’s cellular network. Apple is expected to open at another all time high on the news.

Domtar was upgraded by Raymond James from Outperform to Strong Buy.

Bombardier has arranged financing valued at up to $3.85 billion U.S. with a Chinese leasing company. Finances are to be available for purchasers of Bombardier’s C Series, Q400 and CRJ aircraft. Bombardier currently has an attractive technical profile. Intermediate trend is up. The stock trades above its 50 and 200 day moving averages. A break above resistance at $6.24 implies intermediate upside potential to $6.80.

Tis the season for Bombardier’s stock to move higher prior to the Paris Airshow in mid July!

Don Vialoux, chartered market technician, is the author of a free
daily report on equity markets, sectors, commodities, equities and
Exchange-Traded Funds. For more visit Don Vialoux's Web site

Despite concerns that demand for its double cheeseburger is waning, same store sales at Burger King Holdings Corp. are expected to improve in March and should provide a boost to the beleaguered stock, says Gregory Badishkanian, Citigroup Capital Markets analyst.

"We sense Burger King's U.S. same store sales increased meaningfully during March, following very soft results in January and February due to adverse weather, Mr. Badishkanian said in a note to clients. "We do not believe this is widely expected across the Street."

After falling 8% during the first two months of the year due largely to bad weather, sales at Burger King turned positive in the first week of March.

Even so, investors anticipate only moderate sales growth in March partly on expectations that double cheeseburger demand will continue to moderate.

In February, the fast food chain raised the price on the "BK Dollar Double" to US$1.19 from US$1 and starting in April it will sell the menu favourite with two patties but only one slice of cheese. 

The premium-priced Steakhouse XT sandwich is also not expected to resonate well in the current environment. 

Burger King shares trade at a discount to multi-national peers and short interest represents roughly 10% of the total shares outstanding, he added. He raised his price target to US$22 from US$19, but maintained his Hold rating.

David Pett

Many commentators brush off concerns about rising government deficits by pointing to the low, low yields that government bonds are paying. Why worry about deficits when investors are willing to fork over long-term money at less than 4% a year? The low rates seem to be declaring that Mr. Market isn’t worried about rising public debt.

Not so fast, says Steve Randy Waldman of Interfluidity. While yields on 10-year U.S. Treasury bonds have fallen since the crisis began in late 2007, low yields by themselves don’t constitute an all-clear signal. If anything, today’s bond market is warning about rising inflation down the road.

You can see the warning more clearly if you break the yield on government bonds down into two components—a short-term rate that reflects today’s ultra-loose monetary policy and a term premium that is supposed to cover the interest rate and inflation risks of holding long-term bonds.

You can figure out the size of the second component by comparing the yield on, say, 10-year Treasury bonds to the yield on two-year Treasury bonds. The spread between the two yields isolates the premium that investors are demanding to offset the risks of rising inflation and higher interest rates in years to come.

This spread is now at, but not beyond, historical extremes. Judging from the size of the yield spread, fixed-income investors appear to be as worried about inflation as they have been at any time in the past 35 years. This does not bode well. “I think there is a fair probability that the U.S. will experience the thrilling uncertainty that attends a loss of confidence in its currency and debt,” writes Mr. Waldman.

Freelance business journalist Ian McGugan blogs for the Financial Post. 

It does not look good for DragonWave Inc.'s chances of winning new contracts with AT&T Mobility and Verizon Wireless, says Kris Thompson, National Bank Financial analyst.

Following discussions with so called "industry experts" at the CTIA Wireless convention in Las Vegas last week, Mr. Thompson removed from his estimates any consideration of new deals with AT&T and Verizon for its microwave backhaul technology.

His fiscal 2011 revenue forecast falls by 16% and his earnings estimate declines by 13%. He did maintain his Outperform rating, but dropped his price target from $17 to $14.

"In our view, the stock price could see some more downside if we are correct and DragonWave does not win deployments at AT&T Mobility and Verizon Wireless. However, DragonWave received some positive news from Clearwire’s deployment plans and the company is attacking other international opportunities,"

Mr. Thompson learned from his Las Vegas discussions that North American Tier 1 carriers, such as AT&T Mobility and Verizon Wireless, generally require all-indoor microwave backhaul solutions that place the radio and switching capability in one box.

"This North American preference is due primarily to the desire, or in some cases policy, to avoid tower climbs in the event of a radio malfunction," he said.

"The primary opportunity for DragonWave, in our view, lies in rural areas where fiber connections are less common as compared to urban markets."

David Pett

An improving Canadian job market will limit the impact of expected rate hikes and result in stronger economic growth than originally expected, says Moody's Investor Services.

Jimmy Jean of Moody's Economy.com said Canada's GDP will increase 3.2% in 2010, up from his previous forecast of 2.7%. In 2011, he expects growth of 3.7%.

The unemployment rate, meanwhile, will end the year at 7.9%, down from the
peak of 8.7% reached in August 2009, he said.

"The job market recovery will be instrumental in raising incomes and
alleviating the impact of higher interest rates on household debt
burdens," Mr. Jean said in a note to clients. 

"We believe the timing of the job recovery will be right,
forestalling a shock to household credit quality. Based on our
forecast, we do not expect the rate shock to derail the recovery."

Mr. Jean believes the Bank of Canada will start raising rates as early as April or June, beginning with a 50 basis point hike.

"Given the self-sustaining path the Canadian economy appears to be
taking, the case for leaving rates this low much longer is weakening
almost by the day," he wrote.

David Pett   

Despite opinions to the contrary, stocks are not pricing in an unsustainable economic recovery, says George Vasic, UBS strategist.

He said the performance of non-resource cyclicals in relation to defensive sectors points to markets that are discounting GDP growth in line with cautious expectations.

"Specifically, the ratio of the three cyclicals (industrials, consumer discretionary and technology) relative to the four defensives (consumer staples, telecom, health care and utilities) does track the overall path of economic activity," he said in a note to clients. 

"Indeed, this cyclical/defensive ratio actually leads the ISM by two months, and has actually rebounded in recent months, but only to a level just above its historic average, and in-line with an ISM of about 55." 

From mid-2003 to mid-2008, the ISM averaged 54 and GDP averaged 2.8%.

Based on his forecast of 2.8% growth in 2010 and 3% in 2011, Mr. Vasic said there is upside risk worth taking and recommended investors overweight the three cyclical sectors relative to the four defensives.   

David Pett

U.S. equity index futures are higher this morning. S&P 500 Index futures gained 3 points in pre-opening trade. Futures are responding to a renewed focus on growth in China. The Shanghai Composite Index broke resistance at 3,102.39 to close at 3,124. Analysts are starting to take a more positive stance on China, its impact on commodity prices and on Chinese equities. This morning Dennis Gartman recommended the purchase of Chinese base Exchange Traded Funds.

Equity index futures did not respond significantly to economic news released at 8:30 AM EDT. Consensus for February Personal Income was a gain of 0.1% versus a gain of 0.1% in January. Actual was unchanged. Consensus for February Personal Spending was a gain of 0.3% versus a gain of 0.5% in January. Actual was a gain of 0.3%.

Commodity prices roses significantly when the Shanghai Composite Index broke above resistance. Copper added $0.10 per lb., broke resistance at 348.70 cents per lb. and is testing resistance at 354.40. ‘Tis the season for copper to move higher.

Mines & Metals stocks around the world are trading higher this morning. ‘Tis the season for Mines and Metals stocks to move higher!

Don Vialoux, chartered market technician, is the author of a free
daily report on equity markets, sectors, commodities, equities and
Exchange-Traded Funds. For more visit Don Vialoux's Web site 

Research in Motion Ltd.'s quarterly results should go a long way in curbing investor pessimism overhanging shares in the BlackBerry maker, says Mike Abramsky, analyst, RBC Capital Markets. 

Mr. Abramsky said RIM's fourth quarter earnings due next week will top many analyst expectations while guidance for the upcoming three month period will also be strong.

Other catalysts for the stocks relate to product improvements, including better browsing, an updated user interface, and new application partnerships.

"We see RIM as a leader in the exciting Smartphone sector, which we forecast may become a top 5 handset vendor by calendar year 2011," said Mr. Abramsky.

"As smartphones supplant voice handsets, we see vertically-integrated Smartphone leaders like RIM taking share from incumbent vendors like Motorola, Nokia, Sony Ericsson, Samsung, LG, etc…"

The analyst reiterated his Top pick rating and US$120 price target.

David Pett

When it comes to the three most influential currencies on the planet, the outlook does not look pretty, says Larry Hatheway, economist, UBS AG.

In a note to clients Friday, the UBS economist said the greenback suffers from a large structural budget and current account deficits. The euro, meanwhile, is over-valued and confronted by soveriegn debt risk and the yen is the currency of an anaemic economy.

Thank goodness then for relative valuations.   

"For now the dollar has the upper hand," Mr. Hatheway said "Stronger growth this year in the US (3.0%) versus the Eurozone (1.5%) or Japan (2.0%), together with recurring sovereign risk jitters in Europe, point to further dollar appreciation in 2010."

He revised his year-end 2010 forecasts to EUR/USD 1.30 and left his USD/JPY forecast at 95.0. He also forecasted EUR/USD at 1.25 by the end of 2011 and retained a year-end 2011 forecast of USD/JPY 90.0.

David Pett

If history is any guide, investors in the US stock market can expect real returns of about 4% a year over the next 10 years, according to an interesting analysis by Plexus Asset Management, featured on the Big Picture blog.
 
The study looks back at the returns that the S&P 500 has produced in the past at various levels of valuation. It finds, not surprisingly, that when you choose to invest in the market has a huge impact on how much you earn. Buying the market when it’s pricey depresses your future returns; buying it when it’s cheap increases your profits.

Right now, the S&P has a dividend yield of 2.1%, which by historical standards indicates that it is rather expensive. On previous occasions when dividend yields were at the current level, the market produced an average real return of 4.5% a year over the next 10 years.

Another way to look at the market is in terms of its price-to-earnings ratio based on normalized earnings over the past 10 years. The S&P’s current 10-year p/e ratio is 20.3. That too is on the pricey side. On past occasions when the market has been trading at that level, the average real return over the next decade has been 3.4% a year.

So should you shun stocks? Not so fast. While stocks may not produce exciting returns over the next decade, they look as if they will produce at least some real, after-tax payback. That’s more than you can say for many bonds.

Freelance business journalist Ian McGugan blogs for the Financial Post.

Albert Edwards of Societe Generale believes the fistfight between the United States and China over trade could wind up jolting Canada.

How’s that? Mr. Edwards begins by pointing out that China is importing more. In fact, it expects to record a trade deficit in March, China’s first since April 2004.

China has managed to turn its long-standing trade surplus into a deficit by importing vast amounts of commodities. This makes perfect sense. With U.S. Treasuries paying little in the way of interest, China is losing next to nothing by shunning Uncle Sam’s debt and investing its money in stockpiles of metals and other raw materials that it can turn into goods and infrastructure down the road.

“If you have a pegged exchange rate and have to buy dollar assets, why just pile up mountains of US Treasuries when you can pile up mountains of copper and iron ore that be usefully consumed at some point in the future?” Mr. Edwards asks.

Of course, as he points out, what this amounts to China shifting its trade surplus to other countries—notably commodity producers such as Canada. To the degree that Canadians then use the proceeds to buy U.S. products, the U.S. trade deficit declines and the world’s two superpowers are happy.

But what does the shuffle mean for Canada? Mr. Edwards doesn’t say, but presumably strong Chinese demand for materials translates into good news for Canadian commodity producers and even more upward pressure on the loonie. The catch is that a stronger loonie hurts Canadian manufacturers, since a rising currency makes goods manufactured in Canada more expensive on world markets.

Freelance business journalist Ian McGugan blogs for the Financial Post.

The stability of the highly concentrated Canadian banking system during the recent financial crisis has led some commentators to seize on the idea that what the United States needs is more big banks. But moving in that direction would be a huge mistake, according to Peter Boone of the London School of Economics and Simon Johnson of MIT.

The two professors argue that Canada’s Big Five banks were “actually more leveraged—and therefore more risky—than well-run American commercial banks. For example, JPMorgan was 13 times leveraged at the end of 2008 and Wells Fargo was 11 times leveraged. Canada’s five largest banks averaged 19 times leveraged.”

So what saved Canada’s banking system? Government guarantees, say Mr. Boone and Mr. Johnson. “Today over half of Canadian mortgages are effectively guaranteed by the government, with banks paying a low price to insure the mortgages.”

The other big factor is the cozy relationship between the regulators, the Bank of Canada and the individual banks. “This oligopoly means banks can make profits in rough times—they can charge higher prices to customers and can raise funds more cheaply, in part due to the knowledge that no politician would dare bankrupt them.”

Mr. Boone and Mr. Johnson will no doubt draw flak for their smackdown of Canadian bankers, but they’re right. Despite all the public crowing over Canada’s supposedly brilliant bankers, it’s difficult to argue that bankers themselves deserve much of the credit for weathering the recent storm so well. (If Canadian bankers are so inspired, why aren’t global banks lining up to hire those genius Canucks? And why aren’t Canadian banks dominating world markets?) It’s even harder to argue that we Canadians have some uniquely conservative twist to our character. (In fact, our household debt-to-income levels look strikingly similar to those of Americans.)

But where it is possible to take issue with Mr. Boone and Mr. Johnson is in their outright rejection of the big bank idea. What Canada’s example demonstrates is that regulators and banks can settle into a reasonable co-existence—one in which highly regulated banks are allowed to earn larger profits than their competence deserves on the condition they don’t do anything truly stupid.

In many ways, this amounts to a public utility model of banking. Canadians endure mediocre customer service from our coddled banks. In exchange, we face a low risk that our highly regulated banks will go bust. This seems like a decent compromise. Despite what Mr. Boone and Mr. Johnson say, it’s a compromise that could work in the United States as well.

Freelance business journalist Ian McGugan blogs for the Financial Post. 

Sure, your portfolio probably took it on the chin during the past couple of years, but you can always comfort yourself with this thought—at least you weren’t a ship owner. Charter rates for container ships soared above US$27,500 per day in the heady months of late 2007. Now they’ve plunged to around US$4,600. About 474 ships, or 9% of the global shipping fleet, are still floating idle despite a gradually recovering global economy.

The downturn in global shipping has hammered German shippers with special ferocity, according to Spiegel, the German newsmagazine. Many German ship owners took on debt to finance the construction of new ships back in 2007.

It’s an open question whether ship operators will be able to pay back those loans. Defaults could have widespread repercussions. “The crisis is…eating its way into the foundations of German banks,” Spiegel says. It estimates that HSH Nordbank, Commerzbank, Nord/Lb, Ipex and DVD Bank hold close to 100 billion euros in ship loans.

If you’re counting on economic growth to quickly absorb the spare capacity, think again. “Some 1,000 ships ordered by German shipowners have not yet been delivered,” Spiegel says. “They include about 300 giant container ships, with an estimated value of about 30 billion euros.”

Freelance business journalist Ian McGugan blogs for the Financial Post. 

Canada’s largest real estate investment trust has once again been warned it is distributing more cash to unitholders than it is pulling in.

This time it was Standard & Poor’s which revised its outlook on RioCan REIT to negative from stable because of the company’s distribution policy.

“We view the REIT’s distribution policy to be aggressive relative to similarly rated peers,” said the ratings company.

S&P added debt service coverage measures weakened in 2009 because of several dilutive capital markets transactions. It noted funds from operation were not sufficient to fully cover unit distributions.

“Our ratings on Toronto-based RioCan continue to acknowledge the REIT’s leading position in the Canadian retail real estate market, and the stability of its shopping center portfolio relative to those of its U.S. peers,” said James Fielding, a credit analyst.

“RioCan’s occupancy remains high and the company’s core cash flow has been steady. However, heavy principal amortization related to the REIT’s secured borrowing strategy and temporarily dilutive capital markets transactions weighed on debt service coverage in 2009. Furthermore, we believe the company’s aggressive distribution policy resulted in insufficient coverage of unit distributions.”

The agency said the negative outlook reflects the “potential that internal and external growth may not  may not be adequate to reverse the recent decline in debt service coverage or to cover the unit distribution shortfall.”

It threatened to lower its rating one notch if it appears that debt service coverage will not improve to near two times by the fourth quarter of 2010. It will also lower its rating if it does not appear that funds from operations will fully cover unit distributions.

Ed Sonshone, chief executive of RioCan, vowed at the company’s annual general meeting last year not to cut its distribution despite the softening market conditions.

Heather Kirk, an analyst with National Bank Financial, said in a note to clients she has wavered on her stance that the distribution will be cut.

“We have contended that the REIT would be unlikely to cut its distribution since the shortfall is negligible when backing out the dividend reinvestment plan, which contributed $58 million of capital inflows in 2009.  We are now increasingly nervous. S&P indicate in their report that if certain criteria are not met by Q4 2010 they would notch RioCan down on the rating,” said Ms. Kirk.

She said one notch down on RioCan’s unsecured debentures would take the rating below investment grade, noting they are all investment grade today.

“With a non investment grade rating, RioCan’s cost of financing on unsecured debentures and the addressable investor base would be negatively affected,” said Ms. Kirk.

“S&P has made it very clear that unless the DSC ratio improves and the distribution is covered by FFO, Riocan’s rating is at risk.”

Garry Marr