DBRS Confirms MaRS Development Trust at A (high), Stable Trend

DBRS has today confirmed the rating of the Senior Secured Bonds issued by The MaRS Development Trust (MaRS Trust or the Issuer) at A (high), with a Stable trend, following the confirmation of the rating of the University Health Network (UHN, rated AA (low), Stable; see separate press release). The rating reflects the following factors: (1) the credit strength of UHN, which is responsible for servicing the MaRS Trust bonds through a credit tenant lease; (2) the structural subordination of the lease supporting the MaRS Trust bonds relative to the UHN bonds, as UHN bondholders benefit from a security interest in the bulk of incoming UHN cash receipts; and (3) a comprehensive security package that includes a charge on project assets, the UHN lease, various reserve accounts and insurance policies.

The $100 million proceeds from the first and only bond issue of MaRS Trust have been used to finance the acquisition of land and the construction of the 400,000 square foot Toronto Medical Discovery Tower (the Project). Construction began in February 2003 and was completed in August 2005, with costs coming in slightly below budget. The Project has been leased to UHN for a period of 30 years, which corresponds to the term of the MaRS Trust bonds. During this time, UHN will provide rent payments sufficient to service the bonds as well as cover all operating and maintenance costs.

The Project, along with two existing buildings and one under construction on adjoining lands, is part of an overall effort by the MaRS Discovery District to establish a place where the academic, research and business sectors can come together to help stimulate innovation, entrepreneurship and the creation of successful global businesses from Canada’s science and technology industry. Given that the credit profile of MaRS Trust is linked to that of UHN, any revisions to the rating of the latter would trigger an equal move in the rating of MaRS Trust.

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

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