DBRS Places SP Limited Partnership and SP1 Limited Partnership (Scotia Plaza) Under Review – Developing Implications

DBRS Limited (DBRS) has today placed the rating of $650 million 3.21% First Mortgage Bonds of SP Limited Partnership and SP1 Limited Partnership (each an Issuer and, collectively, the Issuers) secured by Scotia Plaza (the Complex) Under Review with Developing Implications. This rating action follows the announcement on June 20, 2016, that Dream Office Real Estate Investment Trust (Dream Office) and H&R Real Estate Investment Trust (H&R) will sell a combined 50% ownership interest in the Complex (the Transaction) to KingSett Canadian Real Estate Income Fund LP (KingSett) and Alberta Investment Management Corporation (AIMCo; collectively, the New Co-owners).

Under the terms of the Transaction, Dream Office will sell 16.67% of its current 66.67% ownership interest in the Complex and H&R will sell its entire 33.33% interest in the Complex. After completion of the Transaction, Dream Office will retain a 50.00% interest in the Complex and KingSett and AIMCo will be assuming a combined ownership interest of 50.00%. The Transaction is expected to close on June 30, 2016.

In its review, DBRS will primarily assess whether the New Co-owners meet the conditions of an approved transferee as per the Trust Indenture dated June 15, 2012. DBRS will review executed documents in connection with the Transaction, including an amended and restated co-owners’ agreement, supplemental indenture and non-consolidation opinions with respect to the Issuers and New Co-owners.

DBRS aims to resolve the Under Review status which will likely occur around the timing of the Transaction’s closing.

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 methodology is Rating Entities in the Real Estate Industry (May 2015), which can be found on our website under Methodologies.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.