DBRS Morningstar Confirms Rating on Mortgage Loan Made to Albert & Lyon Equities Inc., Albert & Lyon Properties LP, and Canderel CSQ Ottawa LP – Constitution Square

DBRS Limited (DBRS Morningstar) confirmed the rating on the following mortgage loan made to Albert & Lyon Equities Inc., Albert & Lyon Properties LP, and Canderel CSQ Ottawa LP – Constitution Square by a major Canadian financial institution:

-- Mortgage Loan at A (low)

The trend is Stable.

The rating confirmation reflects the overall stable performance of the transaction, which remains in line with DBRS Morningstar’s expectations. The mortgage loan is secured by Constitution Square, a Class A office and retail complex located in Ottawa’s central business district (CBD). The in-place vacancy rate of the property was 25.3% as of March 2022, which is a significant increase from the February 2021 vacancy rate of 9.8%. That increase is attributable to the downsizing of a major tenant at the subject property. In comparison, the submarket vacancy rate for Class A office properties in the Ottawa CBD as reported by CBRE Limited was 6.1% for Q4 2021, down from 7.7% at Q1 2021.While the property’s overall occupancy rate has declined considerably since DBRS Morningstar’s last rating action, the Ottawa CBD office market continues to show signs of improving performance with increased absorption rates and declining vacancy rates. DBRS Morningstar believes the property is well positioned to backfill the vacant space given its condition and location proximate to Parliament Hill and various transit options.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

All ratings are subject to surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by DBRS Morningstar.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The principal methodology is the North American CMBS Surveillance Methodology (March 4, 2022), which can be found on dbrsmorningstar.com under Methodologies & Criteria. For a list of the structured-finance-related methodologies that may be used during the rating process, please see the DBRS Morningstar Global Structured Finance Related Methodologies document, which can be found on dbrsmorningstar.com in the Commentary tab under Regulatory Affairs. Please note that not every related methodology listed under a principal structured finance asset class methodology may be used to rate or monitor an individual structured finance or debt obligation.

The DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/384482.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info@dbrsmorningstar.com.

This rating was initiated at the request of the lender.

The rated entity or its related entities did not participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

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