DBRS Confirms Rating on Dundee Properties Limited Partnership (Enbridge Place) Mortgage Loan

DBRS Limited (DBRS) has today confirmed the rating of BBB with a Stable trend on the 4.132% Mortgage Loan due August 1, 2016 (the Mortgage Loan), by a major Canadian financial institution (the Lender) to Dundee Properties Limited Partnership (the Borrower) in relation to Enbridge Place, Edmonton (the Subject Property).

This rating reflects DBRS’s opinion on the first dollar loss that may be experienced by the Lender, with respect to the interest and principal payment obligations of the Borrower in respect of the Mortgage Loan, solely based on the cash flows (not necessarily considering the timing of those cash flows) generated by the Subject Property, as well as on the current and/or future value of such property.

The Mortgage Loan was made in two separate advances with a blended interest rate of 4.132% per annum, calculated monthly and compounded semi-annually, not in advance, for a term maturing on August 1, 2016, and an amortization period to August 1, 2031. The Mortgage Loan had an outstanding balance of $52,441,409 as of July 1, 2015.

The Mortgage Loan is secured by a fee interest in a two-storey podium with a 22-floor Class A office tower occupied primarily by Enbridge Pipelines Inc. (EPI), known as Enbridge Place. Enbridge Place is located at 10130 103 Street NW, Edmonton, Alberta, in a designated Heritage Area Zone with approximately 260,000 square feet (sf) of office space and approximately 3,000 sf of retail space.

In December 2014, the largest tenant, Enbridge Pipelines Inc., announced a relocation to new buildings in downtown Edmonton, Manulife Place and Kelly Ramsey Tower (scheduled to open in 2016). The move will take approximately 2.5 years to complete (Mah, B., www.edmontonjournal.com). Enbridge Pipelines Inc. (EPI) is currently occupying about 95% of the net rentable area of the Subject Property with leases that expire several years beyond the maturity of the loan. DBRS expects EPI to continue paying its rent or sublet the space should it move out of the Subject Property.

This confirmation of the rating takes into consideration the in-place rental income, lease agreement of EPI, and the principal and interest payment obligations of the Borrower with respect to the Mortgage Loan, but does not take into consideration other obligations of the Borrower or any structural deficiencies that may exist in any organizational or transaction documents.

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.

The applicable methodologies are CMBS Rating Methodology and CMBS North American Surveillance Methodology, which can be found on our website under Methodologies.

The full report providing additional analytical detail is available by clicking on the link under Related Research at the right of the screen or by contacting us at info@dbrs.com.