DBRS Confirms Scotia Plaza First Mortgage Bonds at A (high) (sf) with a Stable Trend

DBRS Limited (DBRS) confirmed the rating of the First Mortgage Bonds (the Bonds) of KS SP Limited Partnership, KS SP1 Limited Partnership, ARI SP Limited Partnership and ARI SP1 Limited Partnership (Scotia Plaza) at A (high) (sf) with a Stable trend. The Bonds are secured by Scotia Plaza (the Property) and have a current outstanding balance of $564.4 million that will mature on June 15, 2019. Recourse is limited to the Property only.

The current rating reflects the credit quality of the Bonds as supported by the current in-place rental revenue as well as the strong market fundamental in the Toronto Financial District office submarket. Based on DBRS’s net cash flow, which is 5.5% lower than the reported year-end 2017 net operating income and implied cap rate, the Bonds represent current and maturity DBRS loan-to-value ratios of 70.1% and 68.2%, respectively, and a DBRS Exit Debt Yield of 10.3%.

All DBRS 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 this transaction.

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

The principal methodology is North American CMBS Surveillance Methodology, 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.