DBRS Morningstar Assigns Ratings of A (high), Stable Trend, to Two Mortgage Loans Secured by Langara Gardens

DBRS Limited (DBRS Morningstar) assigned ratings of A (high) with Stable trends to two pari passu mortgage loans, Loan 1 with 3.485% Interest Rate and Loan 2 with 3.030% Interest Rate (collectively, the Mortgage Loans), made by a major Canadian financial institution (the Lender). The Mortgage Loans, which have a current combined outstanding balance of approximately $70.3 million and a scheduled maturity date of February 1, 2025, are secured by Langara Gardens (the Property), which is an apartment complex in Vancouver, consisting of four high-rise apartment buildings and 39 low-density townhouse buildings comprising 604 residential units and 19,836 square feet of ground-floor retail. The Property is located approximately 6.0 kilometres south of downtown Vancouver.

DBRS Morningstar’s ratings reflect the credit quality of the Mortgage Loans supported by the stability of the net cash flow provided by the in-place rental income combined with the Property’s location in a strong multifamily rental market of the Vancouver’s Westside/Kerrisdale submarket where the most recent market vacancy rate is 0.6%, according to the “Rental Market Report” and “Annual Rental Market Survey” released in February 2022 by Canada Mortgage and Housing Corporation. Based on DBRS Morningstar’s cap rate of 5.75% and the current total combined outstanding loan balance, the Mortgage Loans represent current and maturity DBRS Morningstar loan-to-value ratios of 51.4% and 45.7%, 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 credit ratings assigned to Mortgage Loans are subject to a variation from the applicable methodology. In cases when an applicable methodology does not address one or more elements of a structured finance transaction or obligation, or such elements differ from the expectations contemplated when an applicable methodology was approved, DBRS Morningstar may apply analytical judgment in the determination of any related analytical factor, assumption, credit rating, or other opinion. The rationale for the variation pertains to timely payment of interest to the mortgagee. DBRS Morningstar reviews proposed derivatives arrangements as part of its analysis of Canadian structured finance ratings or transaction assessments. DBRS Morningstar considers it imperative that any such derivatives counterparty be in a position to support payment obligations, in particular at higher investment grade rating categories. As there is no such structure associated with the first dollar loss rating of mortgage loans, DBRS Morningstar generally applies a ceiling to such ratings.

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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