DBRS Confirms Ratings of Institutional Mortgage Securities Canada Inc., 2011-1

DBRS has today confirmed the Commercial Mortgage Pass-Through Certificates Series 2011-1 issued by Institutional Mortgage Securities Canada Inc., 2011-1 as follows:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class B at AA (sf)
-- Class C at A (sf)
-- Class D at BBB (high) (sf)
-- Class E at BBB (sf)
-- Class X at AAA (sf)

All trends are Stable.

The collateral for the transaction consists of 16 fixed-rate loans secured by 16 retail properties across five provinces in Canada. Ontario and Québec represent the largest concentrations, with 40.3% and 27.6% of the pool, respectively. As of the November 2014 remittance report, the pool has a balance of approximately $194.63 million, representing a collateral reduction of 5.52% since issuance. Overall, the loans continue to report stable performance. Based on YE2013 net cash flows, the pool has a weighted-average debt service coverage ratio (DSCR) of 1.55 times (x) and a weighted-average term debt yield of 11.1%.

The pool benefits from strong and experienced sponsors as all of the underlying properties are owned by either RioCan Real Estate Investment Trust (RioCan REIT) or Calloway Real Estate Investment Trust, which are rated BBB (high) and BBB, respectively, by DBRS. Additionally, each loan has a full-recourse guarantee provided by its respective sponsor.

The DBRS analysis included an in-depth review of all the loans in the transaction. As of the November 2014 remittance report, there are two loans on the servicer’s watchlist, representing 2.04% of the current pool balance. Both loans are discussed in greater detail below.

The Cara 107th Avenue Edmonton (Prospectus ID#15, 1.26% of the current pool) and Cara 97th Street Edmonton (Prospectus ID#16, 0.78% of the current pool) loans are both secured by stand-alone fast food restaurant locations in Edmonton. Both of the properties are leased to Swiss Chalet and Harvey’s; however, the Swiss Chalet is currently dark at both locations. According to the servicer, the borrower will continue to pay rent and all operating expenses while it decides if and when to retrofit the locations to a new format restaurant. At this time, Cara has not indicated timing or plans to redevelop the respective sites. The YE2013 performance remains stable as the Cara 107th Avenue Edmonton property reported a DSCR of 1.66x and the Cara 97th Avenue Edmonton property reported a DSCR of 1.56x. Both loans have full recourse to RioCan REIT. DBRS expects that the YE2014 performance figures may decline as the Swiss Chalet locations are now dark.

DBRS continues to monitor this transaction in its Monthly CMBS Surveillance Report, with additional information on the DBRS viewpoint for this transaction, including details on the largest loans in the pool. The November 2014 Monthly Surveillance Report for this transaction will be published shortly. If you are interested in receiving this report, contact us at info@dbrs.com.

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

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

The applicable methodologies are CMBS Rating Methodology (January 2012) and CMBS North America Surveillance Methodology (November 2012), which can be found on our website under Methodologies.