DBRS Assigns Stable Trend to and Confirms Rating of Mortgage Loan Made to Morguard Corporation & 131 Queen Street Limited (131 Queen Street)

DBRS Limited (DBRS) assigned a Stable trend to and confirmed the rating of AAA on the 5.31% Mortgage Loan Due November 1, 2026 (the Loan) made to Morguard Corporation & 131 Queen Street Limited. The Loan is secured by the borrower’s leasehold interest in a mixed-use building located at 131 Queen Street, Ottawa (the Property). As at July 1, 2019, the Loan has a current outstanding balance of approximately $58.7 million, and the Loan will mature on November 1, 2026, with a balloon balance of approximately $28.4 million.

DBRS’s current rating takes into consideration the credit quality of the primary tenant, the Government of Canada (rated AAA with a Stable trend by DBRS), during the loan term as well as the credit quality of the Loan in a refinance scenario based on the dark value of the Property. With a lease expiration nearly matching the loan maturity, the Government of Canada occupies more than 85.0% of the total net rentable area, excluding the residential component, and generates rental income that fully covers the debt service payment of the Loan.

The Property, which was built in 2006, is a 13-storey mixed-used building comprising 312,484 square feet (sf) of office space; 16,776 sf of retail space; and 35 furnished residential apartments. Well located at 131 Queen Street in downtown Ottawa, the Property benefits from its close proximity to Parliament Hill, the Court House and public transit (OC Transpo). The Property continues to benefit from experienced property management from Morguard Corporation as well as the stable real estate fundamentals in Ottawa.

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

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

The principal methodology is the North American CMBS Surveillance Methodology, which can be found on www.dbrs.com under Methodologies & Criteria. 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, which can be found on www.dbrs.com in the Commentary tab under Regulatory Affairs. 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.

This rating was initiated at the request of the lender.

The rated entity or its related entities did not 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.

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