DBRS Confirms Rating on High Park Bayview Inc. – Bayview Village Apartments Mortgage Loan

DBRS Limited (DBRS) has today confirmed the BBB (low) rating on the 5.86% Mortgage Loan due November 1, 2017 (the Mortgage Loan) made by a major Canadian financial institution (the Lender) to High Park Bayview Inc. (the Borrower) in relation to the premises municipally known as 640, 642 and 644 Sheppard Avenue East, Toronto (the Bayview Village Apartments).

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 Bayview Village Apartments, as well as on the current and/or future value of such property.

The Mortgage Loan was made on October 30, 2009, with an interest rate of 5.86% per annum, calculated monthly and compounded semi-annually, not in advance, for a term maturing on November 1, 2017, with a 25-year amortization period. The Mortgage Loan had an outstanding balance of $32.5 million as of July 1, 2016.

The Mortgage Loan is secured by a fee interest in a large-scale multifamily rental complex that includes three 19-storey high-rise rental apartment buildings containing a total of 382 residential suites. The complex is situated in the suburban neighbourhood of Bayview Village on a site of approximately 4.453 acres. It has frontage onto the north side of Sheppard Avenue East and extensive flankage along the east side of Hawksbury Drive.

The Bayview Village Apartments continue to perform well. Over the last year, operating expenses grew in line with the Effective Gross Income, resulting in a stable Net Operating Income and debt service coverage ratio (DSCR).

DBRS’s rating assumes that the Borrower will refinance in 2017 to pay off the principal remaining on the Mortgage Loan and considers its ability to refinance at the end of the Mortgage Loan term.

The confirmation of the rating takes into consideration the in-place rental income of the subject property 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.

The financial performance, the location and condition of the property, the projected refinance DSCR, the reasonable loan amount per suite and the amortization continue to collectively support the BBB (low) rating.

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

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

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 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.