DBRS Upgrades Rideau Centre to A (high) with a Stable Trend

DBRS has today upgraded the 6.75% First Mortgage Bonds, Series A, due March 2014 and the 7.35% First Mortgage Bonds, Series B, due March 2014 (collectively, the First Mortgage Bonds) of Rideau Centre (Rideau or the Centre) to A (high), with a Stable trend, from A (low). The upgrade reflects the strong operating fundamentals for the Centre in addition to the low leverage and DBRS’s strong outlook for the asset through the remaining term of the First Mortgage Bonds.

Rideau has a pre-eminent position in downtown Ottawa and continues to exhibit exceptional sales performance, with an improvement in commercial retail unit (CRU) sales from $860 per square foot (psf) at YE2009 to $930 psf at YE2010. The largest tenant in the collateral portion of the property is Sears, with 37% of the collateral net rentable area (NRA) on a lease through 2020. Other significant tenants at the property include Old Navy, GoodLife Fitness, Harry Rosen and Empire Theatres. The property remains well occupied, with vacancy of just over 1.0% for CRU space at December 31, 2010. The debt service coverage ratio (DSCR) is healthy, at 2.32 times (x) for YE2010, an increase from 2.16x at YE2009. Rideau Centre also has an excellent loan-to-value, with only $113.6 million outstanding secured against the Centre as of the September 2011 remittance.

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

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