DBRS Morningstar Confirms Ratings on 10 Mortgage Loan Transactions

DBRS Limited (DBRS Morningstar) confirmed its ratings on 10 mortgage loan transactions comprising 12 loans, as discussed in greater detail below. The rating confirmations generally reflect the overall stable performance of each loan since ratings were assigned in 2022. All trends are Stable.

Each of the loans is secured by a first lien on the mortgage property(s). All loans were made by a major Canadian financial institution (the Lender) with maturity dates between February 2025 and December 2040. All outstanding loans are reported current and paid as agreed according to the Lender.

Four transactions (351 Hillmount Road, Winston Business Park, Superior Business Park, and Kingswood Industrial Park) are secured by four industrial properties, with three in the Greater Toronto Area, Ontario, and one in Richmond, British Columbia. The rating confirmations on these four transactions reflect (1) the expected stability of debt payments given the strong operating history and institutional sponsorship; (2) long-term tenancy and granular tenant rollover; (3) the locations of these properties in well-established industrial parks; and (4) the expected partial to full amortization that will take place over the remaining term of each loan.

Two transactions (ASQ Building and 1166 Alberni Street) are secured by two office buildings in Vancouver, British Columbia. The rating confirmations reflect (1) the expected stability of debt payments, given the stable operating history and institutional sponsorship; (2) moderate loan-to-value ratios (LTVs); (3) the stable overall office market fundamentals in Vancouver; and (4) the expected partial amortization that will take place over the remaining term of each loan.

Two transactions (Tillicum Centre and Aspen Landing Shopping Centre) are secured by grocery-anchored retail centers in Victoria, British Columbia and Calgary, Alberta. The rating confirmations reflect (1) the expected stability of debt payments, given the stable operating history and institutional sponsorship; (2) long-term tenancy and stable historical occupancies; (3) the properties’ central locations in major retail corridors with proximity to various demand drivers; and (4) the expected partial amortization that will take place over the remaining term of each loan.

One transaction (Infinity Building) comprises two pari passu loans secured by a mixed-use property in Vancouver. The rating confirmations reflect (1) the expected stability of debt payments, given the strong operating history and institutional sponsorship; (2) the property’s location in a well-established retail corridor that is well-serviced by public transportation; (3) long-term tenancy coupled with a corporate guarantee by an investment-grade parent; and (4) the expected partial amortization that will take place over the remaining loan term.

One transaction (Langara Gardens) comprises two pari passu loans secured by an apartment complex with ground-floor retail in Vancouver. The rating confirmations reflect (1) the expected stability of debt payments, given the strong operating history and institutional sponsorship; (2) a low to moderate LTV; (3) the property’s location in a well-established residential neighborhood with proximity to retail commercial nodes and public transit; and (4) the expected partial amortization that will take place over the remaining loan term.

The DBRS Morningstar ratings assigned to the Langara Gardens Loan 1 with 3.485% Interest Rate and Loan 2 with 3.030% Interest Rate are lower than the results implied by the LTV sizing benchmarks by three or more notches. These variances are warranted because the loan is not subject to advancing for delinquent payments. The legal features of the loan were also considered in DBRS Morningstar’s analysis.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factor(s) 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/416784 (July 4, 2023).

All credit ratings are subject to surveillance, which could result in credit 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 North American CMBS Surveillance Methodology (March 16, 2023) https://www.dbrsmorningstar.com/research/410912.

Other methodologies referenced in this transaction are listed at the end of this press release.

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.

The credit rating was initiated at the request of the lender.

The lender or its related entities did participate in the credit rating process for this credit rating action.

DBRS Morningstar had access to the accounts, management, and other relevant internal documents of the lender or its related entities in connection with this credit rating action.

This is a solicited credit rating.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process.

DBRS Limited
DBRS Tower, 181 University Avenue, Suite 700
Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577

The credit rating methodologies used in the analysis of this transaction can be found at: https://www.dbrsmorningstar.com/about/methodologies.

North American Single-Asset/Single-Borrower Ratings Methodology (February 23, 2023;
https://www.dbrsmorningstar.com/research/410191)

DBRS Morningstar North American Commercial Real Estate Property Analysis Criteria (September 12, 2022; https://www.dbrsmorningstar.com/research/402646)

A description of how DBRS Morningstar analyses structured finance transactions and how the methodologies are collectively applied can be found at: https://www.dbrsmorningstar.com/research/410863

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