DBRS Morningstar Assigns Rating of BBB, Stable Trend, to the Mortgage Loan Secured by ASQ Building

DBRS Limited (DBRS Morningstar) assigned a rating of BBB with a Stable trend to the Mortgage Loan made by a major Canadian financial institution (the Lender). The Mortgage Loan, which has a current outstanding balance of $48.4 million and is scheduled to mature on August 1, 2030, is secured by ASQ Building (the Property), which is a 14-storey Class B office building plus a two-storey podium with a total net rentable area of 230,471 square feet, located approximately 10 kilometres south of downtown Vancouver.

DBRS Morningstar’s rating reflects the credit quality of the Mortgage Loan supported by the stability of the net cash flow provided by the in-place rental income combined with stable overall office market fundamentals in Vancouver. Although there is no direct submarket data available, according to CBRE Research’s Q1 2022 Vancouver Office figures, the current market vacancy for the entire Metro Vancouver office market is 6.9%. Based on DBRS Morningstar’s cap rate of 7.25% and the current outstanding loan balance, the Mortgage Loan represents current and maturity DBRS Morningstar loan-to-value ratios of 81.8% and 59.0%, respectively.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance (ESG) factors that had a significant or relevant effect on the credit analysis.

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/396929.

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

The principal methodology is the North American Single-Asset/Single-Borrower Ratings Methodology (June 10, 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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