DBRS Confirms Market Mall (Cadillac & Cambridge) at "A"

DBRS has confirmed its “A” rating of Market Mall’s (the Shopping Centre) Series A First Mortgage Bonds, as the Shopping Centre’s credit profile remains stable with support from strong sales performance and improving credit metrics.

The current rating is based on the performance of the Shopping Centre and reflects the following factors:

(1) The Shopping Centre achieved year-over-year growth in sales performance with an uplift in commercial retail unit (CRU) sales per square foot to $870 as of May 2010, representing an increase of 1.6% over April 2009. This sales volume ranks near the top when compared with other regional shopping centres rated by DBRS. Although the pace of sales growth will likely be moderate over the next two years, given market conditions, DBRS expects the demand for retail space in Calgary will continue in the near term. This is evidenced by the low CRU vacancy rates at Market Mall.

(2) The Shopping Centre’s improved sales performance and low vacancy rates continue to drive higher average CRU net rental rates. The improvement in performance is shown by the increase in net operating income (NOI) levels and coverage ratios for the Shopping Centre. For F2009, interest coverage and debt service ratios were 4.62 times and 2.91 times, respectively, and compare favourably with other shopping centres rated by DBRS.

Overall, DBRS expects that Market Mall will likely continue to exhibit a strong level of NOI and solid operating metrics, providing underlying support to the credit profile going forward.

For more detailed information on the shopping centre and the DBRS analysis, please refer to the full rating report which is 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.