DBRS Confirms Oakville Place and Southgate Shopping Centre at ‘A’ with a Stable Trend.

DBRS has today confirmed the ‘A’ rating of the Secured Debentures of Oakville Place and Southgate Shopping Centre (Oakville and Southgate or the Properties) with a Stable trend. The rating reflects Oakville and Southgate’s improved operating performance and solid credit metrics. The rating takes into consideration the following:

Southgate achieved CRU sales per square foot of $723 for the F2009 representing a decrease of 8% year-over-year; however, DBRS notes that this level of sales per square foot is among the highest of DBRS rated shopping centres.

Southgate has completed the expansion program, adding over 100,000 sf of additional space and is expected to increase NOI going forward. The expansion project has brought many luxury tenants to Southgate and has successfully reconfigured previously vacant space to accommodate new tenants.

Overall, these projects should further enhance the Properties’ competitive position within their respective markets and improve overall customer appeal.

The DBRS rating also considers the risk that the Series II and Series III debentures mature October 1, 2010, with a balloon payment of $60.6 million, and will either have to be paid out, or new financing terms will have to be arranged. This introduces refinancing risk. DBRS has estimated a refinance DSCR range based on stressed cash flow scenarios.

With respect to refinance risk, given the low amount of debt outstanding against the debentures at the date of maturity, DBRS has estimated a refinance DSCR range to be above 4.0 times. This range is based on a stressed cash flow scenario that projects losses of 50% to 100% of vacant, expired, month-to-month and temporary tenants at the properties. Based on the projected DSCR range in these stressed scenarios as well as the properties’ historically strong performance, DBRS views refinance risk as manageable.

For more detailed information on the Project and the DBRS analysis, please refer to the full rating report available on the DBRS web site.

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

The applicable methodologies are Rating Real Estate and Canadian Structured Finance Flow-Through Ratings, which can be found on our website under Methodologies.