DBRS Assigns Provisional Rating of A (low) to Bankers Hall LP, Senior Secured Bonds

DBRS has today assigned a provisional rating of A (low), with a Stable trend, to the $300 million *% Senior Secured Bonds (the Bonds) secured by Bankers Hall LP’s (the Issuer) 50% interest in Bankers Hall (the Complex) located in Calgary, Alberta. The remaining 50% interest in the Complex is owned by a large Canadian institutional investor. The Issuer is structured as a bankruptcy remote, single-purpose entity whose sole purpose is to own and manage the Complex. The net proceeds from the Bonds will be used for general corporate purposes. The Bonds will have a ten-year term from the closing date, subject to a 30-year amortization schedule, with an interest rate of *% per annum, compounded semi-annually.

The A (low) rating is based on a DBRS refinance DSCR of 1.73x and a DBRS refinance LTV of 59.4%. These metrics were formulated assuming a debt constant of 8.50%, capitalization rate of 8.75% and DBRS stabilized net cash flow of $35.6 million for the 50% interest. These key assumptions reflect DBRS’s view of the quality and location of the Complex, the below-market in-place rental rates and the strength of the sponsors and property manager. These assumptions also consider the volatility of the Calgary office market and the risk of oversupply stemming from upcoming development projects.

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

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

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