DBRS Assigns Rating of A (low) to the $181 million 5.317% First Mortgage Bonds, due June 1, 2020, secured by Lime Ridge Mall

DBRS has assigned to the $181 million, 5.317% First Mortgage Bonds, due June 1, 2020, secured by Lime Ridge Mall (Lime Ridge or the Property), a rating of A (low), with a Stable trend. The Bonds will be direct obligations of Ontrea Inc. (Ontrea or the Issuer), with recourse limited to the Property. The net proceeds will be used by the Issuer to retire the outstanding principal amount of the existing $125,000,000 mortgage bonds, due June 1, 2010, and for general corporate purposes.

While this issuance of $181 million represents a substantial increase (45%) over the original bonds issued at $125 million in 1998, the Issuer and Lime Ridge management have been able to create significant value over the years by reinvesting capital for interior renovations and other upgrades at the Property and by instituting successful leasing initiatives. Base rent and the appraised value have doubled over the twelve-year period. The rating takes into consideration the credit characteristics of the issuance of the Bonds, the performance of the Property, management experience and key structural features.

DBRS-stabilized net cash flow (NCF), when measured against a reversionary capitalization rate and stressed refinance debt constant, resulted in a 61% loan-to-value (LTV) and a 1.52 times (x) refinance debt service coverage ratio (DSCR), respectively, which supports the A (low) rating.

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

The applicable methodology is Rating Real Estate, which can be found on our website under Methodologies.

This is a Corporate rating.