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 Certificate 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 X at AA (sf)
-- Class C 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 of the transaction. The pool consists of 16 loans secured by 16 retail properties located across Canada. As of the August 2018 remittance, the pool has a current trust balance of $180.7 million, representing a collateral reduction of 12.3% due to scheduled loan amortization, with all loans remaining in the pool as all loans carry a ten-year term. Based on the most recent year-end reporting, the pool is reporting a weighted-average (WA) debt service coverage ratio (DSCR) and debt yield of 1.50 times (x) and 11.6%, respectively, compared with the DBRS WA DSCR and debt yield at issuance of 1.33x and 9.0%, respectively.

All loans in the pool benefit from strong sponsorship with full recourse to either SmartCentres Real Estate Investment Trust (SmartCentres) or RioCan Real Estate Investment Trust (RioCan), both of which are entities rated investment grade by DBRS. In December 2017, DBRS assigned BBB ratings with Stable trends to $500 million of senior unsecured debentures issued by SmartCentres, while assigning a BBB (high) rating with a Stable trend to $300 million of senior unsecured debentures issued by RioCan in January 2018.

According to the August 2018 remittance, there are two loans (6.8% of the pool) on the servicer’s watchlist and no loans in special servicing. The RioCan Vaudreuil-Dorion loan (Prospectus ID#10, 5.6% of the pool) is secured by a retail centre in Vaudreuil-Dorion, Québec. The property has historically had periods of increased vacancy, most recently following the departure of Sports Excellence (19.6% of the net rentable area (NRA)) in March 2018, ahead of its April 2022 lease expiration. According to RioCan’s interactive webpage, however, the space has been filled by Surplus RD, though DBRS currently does not have the updated leasing terms for this tenant. The second watchlisted 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 NRA), went dark in 2014. The tenant continues to pay rent as obligated by the lease, which runs through 2024.

Class X is an interest-only (IO) certificate that references multiple rated tranches. The IO rating mirrors the lowest-rated applicable reference obligation tranche.

All ratings will be subject to ongoing surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed or discontinued by DBRS.

As part of this review, DBRS has provided updated analysis and in-depth commentary in the DBRS Viewpoint platform for the following loans in the transaction:

-- Kildonan Crossing Shopping Centre (Prospectus ID #1, 10.5% of pool)
-- Welland SmartCentre (Prospectus ID #2, 10.1% of pool)
-- Sherbrooke SmartCentre (Prospectus ID #3, 10.0% of pool)
-- Fallingbrook Shopping Centre (Prospectus ID #4, 9.8% of pool)
-- Sandalwood Square Shopping Centre (Prospectus ID #5, 9.2% of pool)
-- RioCan Vaudreuil-Dorion (Prospectus ID #10, 5.6% of pool)
-- Cara 107th Avenue Edmonton (Prospectus ID #15, 1.3% of pool)

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrs.com. The platform includes issuer and servicer data for the entire CMBS universe, as well as deal and loan-level commentary for all DBRS rated transactions.

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

The principal methodology is CMBS North American Surveillance, which can be found on dbrs.com under Methodologies. For a list of the Structured Finance related methodologies that may be used during the rating process, please see the DBRS Global Structured Finance Related Methodologies document on www.dbrs.com. Please note that not every related methodology listed under a principal Structured Finance asset class methodology may be used to rate or monitor an individual structured finance or debt obligation.

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 under Related Documents or by contacting us at info@dbrs.com.

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

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