Canadian Real Estate Entities—Future Debt Capital Structures Likely to Remain Unsecured
Over the last 10 years, Canadian Real Estate Entities rated by DBRS Morningstar, collectively (i.e., rated entities and the rated universe), have been unwavering in their drive toward a primarily unsecured debt balance sheet. The key drivers had been the positive unsecured debt funding environment, with the cost differential between unsecured debt and mortgage debt being very narrow, as well as a desire to increase flexibility within the debt stack. In 2021 the rated universe had unsecured debt accounting for 69% of total debt, while in 2010 the figure was 40%. We anticipate only marginal gains over the next two years with unsecured debt as a percentage of total debt being relatively stable in 2022 and 2023.
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