DBRS Confirms Ratings on Institutional Mortgage Securities Canada Inc., Series 2013-4

DBRS, Inc.(DBRS) has today confirmed the ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2013-4 (the Certificates), issued by IMSCI 2013-4 Mortgage Trust, as follows:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class X at AAA (sf)
-- Class B at AA (sf)
-- Class C at A (sf)
-- Class D at BBB (sf)
-- Class E at BBB (low) (sf)
-- Class F at BB (sf)
-- Class G at B (sf)

All trends are Stable. DBRS does not rate the first loss piece, Class H.

The rating confirmations reflect the overall stable performance of the pool since issuance. The pool consists of 33 loans, secured by 37 commercial properties. Since issuance in December 2013, the transaction has experienced collateral reduction of 2.1% as a result of scheduled loan amortization. According to YE2013 reporting, the pool has a weighted-average debt service coverage ratio (DSCR) and weighted-average debt yield of 1.60 times (x) and 10.6%, respectively.

As of the November 2014 remittance, there are three loans on the servicer’s watchlist, representing 4.7% of the current pool balance. Prospectus ID#16, 4th Avenue Office, is secured by an 11-storey office building, located in southwest Calgary. This loan is on the servicer’s watchlist due to a YE2013 DSCR of 0.64x, which was caused by partial year rental revenue collections and rent abatements associated with new leases signed throughout 2013. As all free rent periods expired by January 2014 and the property was 96% occupied according to the March 2014 rent roll, property performance is expected to stabilize moving forward.

The second largest loan on the servicer’s watchlist, Prospectus ID#27, Holland Marsh is secured by a retail property in Bradford, Ontario. The loan is also on the servicer’s watchlist due to a low YE2013 DSCR of 0.92x caused by a decrease in rental income associated with a rent abatement period for the property’s largest anchor tenant, TSC stores. Per the lease agreement, TSC paid 50% of its rent for the first seven months of its lease, ending February 2014. As TSC is now paying full rent, property performance is also expected to stabilize.

At issuance, DBRS shadow-rated one loan as investment grade, representing 8.8% of the current pool balance. DBRS has today confirmed that the performance of this loan remains consistent with investment grade credit characteristics.

The DBRS analysis included an in-depth review of the top 15 loans, the shadow-rated loan and the loans on the servicer’s watchlist, which collectively represent 71.5% of the current pool balance.

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 CMBS 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.

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

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