We are pleased to announce that one of our major net-leased tenants, Dollar Tree, has recently received an upgrade of its investment-grade credit rating from BBB- to BBB. Standard & Poor’s credits the upgrade to Dollar Tree’s resilient performance throughout 2020’s government-imposed shutdowns, its aggressive debt reduction since acquiring Family Dollar in 2015, and its ongoing store renovations and merchandising improvements. Dollar Tree and Family Dollar are considered essential U.S. retailers and have seen no widespread store closings to date. According to Standard & Poor’s, Dollar Tree’s essential status and conservative financial policy position the company for “further sales gains through fiscal 2021” and sustained good performance “even without further stimulus from the federal government”.
The improved credit rating for Dollar Tree is indicative of the qualities that we look for in tenants for all of our diversified net-leased offerings. Like our other necessity-retail tenants, Dollar Tree provides goods that are needed even during economic downturns and has solid financial metrics including a strong balance sheet that got even stronger in the face of unprecedented economic turmoil in 2020. These features fortify Dollar Tree’s ability to consistently meet the terms of the long-term net-leases for ExchangeRight’s properties. We have experienced this firsthand as we have received 100% of rents from all of the Dollar Tree and Family Dollar properties we have managed since our company’s inception.
We remain confident in the resilience of Dollar Tree and our other investment-grade tenants, we are proud of how the company has positioned itself to continue serving the needs of the American people, and we are pleased that ExchangeRight’s offerings have continued to live up to the goal of providing investors with stable income and secure capital even through economic downturns due to the strength of our tenants.
Please read below for highlights from Standard & Poor’s announcement about Dollar Tree:
- The company has sustained sales, with a notable spike in Family Dollar's comps to 11.2% and 2.1% growth in Dollar Tree's segment comps in the 39 weeks ended Oct. 31, 2020.
- Dollar Tree decreased its debt despite 2020's volatile operating environment, signaling a commitment to a conservative financial policy. Dollar Tree has reduced its debt by approximately $5.5 billion since its Family Dollar acquisition in 2015.
- Standard & Poor’s expects strong liquidity supported by robust cash flow generation to continue through fiscal 2021 and 2022. Dollar Tree had $1.2 billion revolver availability and an unusually elevated $1.12 billion of cash on hand as of October 31, 2020.