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

DBRS Limited (DBRS) confirmed the ratings on the following classes of Commercial Mortgage Pass-Through Certificates Series 2011-1 (the Certificates) issued by Institutional Mortgage Securities Canada Inc., 2011-1:

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

All trends are Stable.

The rating confirmations reflect the overall stable performance exhibited since issuance. As of the September 2017 remittance, all 16 original loans remained in the pool with an aggregate principal balance of $184.4 million, representing a collateral reduction of 10.5% since issuance as the result of scheduled loan amortization. Based on the YE2016 financials for the underlying loans (100% of the pool reporting), the transaction has a weighted-average (WA) debt service coverage ratio (DSCR) and WA debt yield of 1.66 times (x) and 12.5%, respectively, compared with the previous year’s WA DSCR and WA debt yield of 1.65x and 12.3%, respectively.

The pool is concentrated by property type as all 16 loans are secured by retail properties. However, all the loans in the pool benefit from strong sponsorship, as all of the collateral properties are owned by RioCan Real Estate Investment Trust (RioCan REIT) or Smart Real Estate Investment Trust (SmartREIT), formerly known as Calloway REIT. Both entities are rated investment grade by DBRS, with RioCan REIT rated BBB (high) with a Stable trend, most recently confirmed in April 2016, and SmartREIT rated BBB with a Stable trend, most recently confirmed in July 2016. Additionally, each loan has a full-recourse guaranty provided by its respective sponsor.

There are no delinquent or specially serviced loans; however, one loan, Cara 107th Avenue Edmonton (Prospectus ID#15, 1.3% of the current pool), has been on the servicer’s watchlist since the loss of the property’s largest tenant, Swiss Chalet (73.3% of net rentable area), which closed in 2014. The tenant continues to pay rent as obligated by the lease, which runs through 2024.

With this review, DBRS has provided updated loan-level commentary and analysis for the larger and/or pivotal loans in the transaction in the DBRS Viewpoint platform. Registration is free. To view these and future loan-level updates provided as part of DBRS’s ongoing surveillance for this transaction, please register or log into DBRS Viewpoint at viewpoint.dbrs.com

The rating assigned to Class C materially deviates from the higher rating implied by the quantitative results. DBRS considers a material deviation to be a rating differential of three or more notches between the assigned rating and the rating implied by the quantitative results that is a substantial component of a rating methodology. The deviation for Class C is warranted as sustainability of loan trends has not yet been demonstrated.

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 principal methodology is CMBS North American Surveillance, which can be found on dbrs.com under Methodologies.

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

The rated entity or its related entities did participate in the rating process. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities.

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