RE:Credit Rating NRtext from DBRS release:
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DBRS Limited (DBRS Morningstar) confirmed Sienna Senior Living Inc.'s (Sienna or the Company) Issuer Rating and Senior Unsecured Debentures rating of BBB. All trends are Stable. The rating confirmations are based on Sienna’s position as a leading provider of seniors housing across the continuum of care in Canada, high-quality portfolio of retirement and long-term care (LTC) properties, stable and predictable LTC funding, and strong track record of adhering to strict LTC regulatory requirements. Although the Coronavirus Disease (COVID-19) pandemic has materially affected Sienna's operations and persisted longer than initially expected, its impact on key financial risk assessment metrics is nevertheless expected to be temporary and supports the Stable trends. As the duration of the coronavirus pandemic has continued longer than was anticipated at the time of the last review in September 2020, this has contributed to a notable decline in EBITDA, driven by greater deterioration in the retirement segment relative to the LTC segment. Importantly, provincial governments (Ontario and British Columbia) continue to provide significant funding support to LTC operators, such that the majority of extraordinary pandemic expenses and lost revenues, due to lower occupancy, are expected to be recovered, albeit with a one- or two-quarter lag. Furthermore, while the ultimate pace of recovery in retirement occupancy remains uncertain, DBRS Morningstar believes that the long-term fundamentals remain intact, as Sienna is well positioned to benefit from strong demand for seniors housing, given its portfolio of high-quality residences.
Supported by the high vaccination rate of residents and staff, along with the gradual relaxation of public health measures, DBRS Morningstar has increased confidence that a gradual recovery in Sienna's key financial metrics is underway. After making adjustments to exclude the net impact of pandemic expenses/recoveries, DBRS Morningstar expects the consolidated debt-to-EBITDA ratio to remain below 8.0 times (x) in 2021 and 2022, compared to 7.4x in 2020. Similarly, the consolidated EBITDA-to-interest ratio is expected to improve to 4.0x or above in 2021 and 2022. All ratios are DBRS Morningstar adjusted."