DBRS Confirms Rating on Faubourg Boisbriand Shopping Centre Holdings Inc. — Faubourg Boisbriand Power Centre Mortgage Loan

DBRS has today confirmed the rating of BBB (low) on the 5.22% Mortgage Loan due May 1, 2021 (the Mortgage Loan), by a major Canadian financial institution in relation to a section of Faubourg Boisbriand Power Centre, 2515-3480 Des Grandes Tourelles Avenue, Boisbriand, Québec (the Subject Property or Faubourg Boisbriand).

The Mortgage Loan was made on April 20, 2011, with an interest rate of 5.22% per annum, calculated monthly and compounded semi-annually, not in advance, for a term maturing on May 1, 2021, with a 25-year amortization period. The Mortgage Loan had an outstanding balance of $86,172,237 as of August 1, 2014.

The Mortgage Loan is secured by a fee interest in a section of Faubourg Boisbriand, representing an area of 639,604 square feet. The Subject Property is anchored by Target, The Brick, Toys “R” Us, IGA and Déco Découverte (Home Outfitters). Faubourg Boisbriand is part of the redevelopment of a 232-acre former General Motors Canada site.

Over the last year, the Subject Property continued to perform well. Total vacant space as of the end of 2013 was substantially below the allowance deducted in DBRS’s underwriting. Year-end 2013 gross income, real estate taxes, management fees and operating expenditures were in line with DBRS’s initial assumptions.

The derived debt service coverage ratio (DSCR) remains in excess of 1.3 times and is still expected to exceed 1.4 times at the time of refinancing, as the projected amortization of the principal balance on the Mortgage Loan most likely will more than offset the projected increase in the cost of financing.

DBRS assumes that Faubourg Boisbriand Shopping Centre Holdings Inc. (the Borrower) will refinance in 2021 to pay off the principal remaining on the Mortgage Loan, and the rating considers the ability of the Borrower to refinance at the end of the Mortgage Loan term. The location, condition and the historical performance of the Subject Property, the derived DBRS term DSCR, the derived DBRS loan-to-value and the amortization collectively support the BBB (low) rating.

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.