DBRS Morningstar Confirms Rating of Mortgage Loan Made to Morguard Corporation & 131 Queen Street Limited

DBRS Limited (DBRS Morningstar) confirmed the rating on the following mortgage loan (the Loan) made to Morguard Corporation & 131 Queen Street Limited (the Borrower) by a major Canadian financial institution:

-- 5.31% Mortgage Loan Due November 1, 2026, at AAA

The trend is Stable.

The rating confirmation reflects the overall stable performance of the transaction, which remains in line with DBRS Morningstar’s expectations. The Loan is secured by the Borrower’s leasehold interest in a mixed-use building at 131 Queen Street in Ottawa (the Property). The Property, which was built in 2006, is a 13-storey building comprising 312,484 square feet (sf) of office space, 16,776 sf of retail space, and 36 furnished residential apartments. Well located in downtown Ottawa, the Property benefits from its close proximity to Parliament Hill, the courthouse, and public transit (OC Transpo). According to the February 10, 2021, rent roll, the office and retail components were fully leased, while 16 of the 36 apartment units were vacant. The Property continues to benefit from experienced property management from Morguard Corporation (rated BBB (low) with a Stable trend by DBRS Morningstar) as well as the stable real estate fundamentals in Ottawa.

DBRS Morningstar’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 Morningstar), which occupies the entire office component on a triple net lease that expires in August 2026, two months prior to the loan maturity date. The rents from the lease fully cover the debt service on the Mortgage Loan. Any change to the rating of the Government of Canada during its lease term will likely have an effect on the rating of the Loan.

ESG CONSIDERATIONS
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

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

Notes:
The principal methodology is North American CMBS Surveillance Methodology (March 26, 2021), which can be found on dbrsmorningstar.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 Morningstar Global Structured Finance Related Methodologies document, which can be found on dbrsmorningstar.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.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

For more information regarding structured finance rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/358308.

For more information regarding the structured finance rating approach and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/359905.

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 [email protected].

This rating was not 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 Morningstar 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.dbrsmorningstar.com or contact us at [email protected].

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