Teranet Holdings L.P.

The stable outlook reflects our view that the GTA real estate markets are expected to gradually recover in the coming quarters. We expect registration volumes to stabilize starting in the second half of 2019 and to gradually grow in 2020, leading to funds from operations (FFO) interest coverage to be higher than 1.8x in 2019 and 2020. This also assumes that Teranet will continue to meet its various debt service coverage ratio (DSCR) thresholds in its bond indenture and meet its performance standards under the license agreement. We could lower the rating if, contrary to our expectation, the nascent recovery that we have seen in second-quarter 2019 does not continue and transaction volumes continue to fall leading to sustained drop

...Teranet Holdings L.P.'s (Teranet's) concession agreements give it an exclusive service provider position over electronic property search and registration services.Teranet provides these services under long-term concession agreements in Ontario and Manitoba. In Ontario, which contributes approximately 90% of total revenues, Teranet owns the Province of Ontario's electronic land registry system (ELRS) under a license agreement until March 31, 2067, as well as the electronic writs system. In Manitoba, which contributes approximately 10% of total revenues, Teranet has a 30-year concession to own and operate the The Property Registry of Manitoba (TPR) until March 28, 2044. With these services under long-term concessions, Teranet's operates as an exclusive provider of these services given that in Ontario, ELRS is the only way ownership of real property and interests on titles can be electronically searched, recorded, and transferred. Similarly, exclusive access to the writs system further strengthen...

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