Morningstar DBRS Confirms First Loss Credit Ratings on 13 Mortgage Loan Transactions
Commercial MortgagesDBRS Limited (Morningstar DBRS) conducted its surveillance review of 13 mortgage loan transactions comprising 16 loans and confirmed its first loss credit ratings on all transactions. The credit rating actions generally reflect the overall stable performance of each loan since the last credit rating action. All trends are Stable.
Each of the loans is secured by a first lien on the mortgage properties. All loans were made by a major Canadian financial institution (the Lender) with maturity dates between August 2025 and December 2040. The three loans maturing within the next 12 months (Langara Gardens, Paramount Apartments Limited, and Tillicum Centre) exhibit healthy performance metrics and are well positioned for refinancing. All outstanding loans are reported current and paid as agreed according to the Lender.
Four transactions (351 Hillmount Road, Winston Business Park, Superior Business Park, and Kingswood Industrial Park) are secured by four industrial properties: three in the Greater Toronto Area, Ontario, and one in Richmond, British Columbia. While Superior Business Park and Kingswood Industrial Park have some notable tenant rollover in the next 12 months, both properties are in markets that exhibit strong fundamentals with vacancy rates lower than 4.0%. The credit rating confirmations reflect (1) the expected stability of debt payments, given the strong operating history and institutional sponsorship; (2) long-term tenancy and granular tenant rollover; (3) the locations of these properties in well-established industrial parks; and (4) the expected partial to full amortization that will take place over the remaining term of each loan.
Three transactions (1166 Alberni Street, ASQ Building, and Albert & Lyon Equities Inc., Albert & Lyon Properties LP and Canderel CSQ Ottawa LP - Constitution Square (Constitution Square)) are secured by three office properties: two Class B properties in Vancouver and one Class A property in Ottawa. Occupancy figures generally remain in line with Morningstar DBRS' expectations from the previous review; however, Constitution Square continues to report an occupancy rate lower than 70.0% and 1166 Alberni, which most recently reported an occupancy rate of 85.0%, has leases representing 11.8% of the net rentable area scheduled to expire during the next 12 months. The loans benefit from (1) the expected stability of debt payments, given the strong operating history and institutional sponsorship; (2) locations in desirable central business districts; and (3) the expected partial to full amortization that will take place over the remaining term of each loan.
Two transactions (Tillicum Centre and Aspen Landing Shopping Centre) are secured by grocery-anchored retail centres in Victoria and Calgary. Both properties remain nearly 100% occupied. The credit rating confirmations reflect (1) the expected stability of debt payments, given the stable operating history and institutional sponsorship; (2) long-term tenancy and stable historical occupancies; (3) the properties' central locations in major retail corridors with proximity to various demand drivers; and (4) the expected partial amortization that will take place over the remaining term of each loan.
One transaction (Langara Gardens) comprises two pari passu loans secured by an apartment complex with ground-floor retail in Vancouver. The credit rating confirmations reflect the continued stable performance of the transaction, as evidenced by the occupancy rate and net operating income (NOI), both of which remain in line with Morningstar DBRS' expectations. The loan maturities have now been extended twice by three months, subject to a higher interest rate, with a scheduled maturity in August 2025. The loans benefit from (1) the expected stability of debt payments, given the strong operating history and institutional sponsorship; (2) a low loan-to-value (LTV) ratio; (3) the property's location in a well-established residential neighbourhood with proximity to retail commercial nodes and public transit; and (4) the partial amortization that will continue through the remaining loan term.
One transaction (Paramount Apartments Limited) comprises two pari passu loans secured by multifamily property in Halifax. The credit rating confirmations reflect the continued stable performance of the transaction, as evidenced by the occupancy rate and NOI, which remain in line with Morningstar DBRS' expectations at the previous credit rating action. The loans benefit from (1) the expected stability of debt payments, given the stable operating history and institutional sponsorship; (2) the history of stable occupancy and above-market rents; (3) the location of the property in a strong multifamily submarket; and (4) the expected partial amortization that will take place over the remining loan term.
One transaction (Infinity Building) comprises two pari passu loans secured by a mixed-use property in Vancouver. While the documents for Infinity Building are dated, the credit rating confirmations reflect (1) the expected stability of debt payments, given the strong operating history and institutional sponsorship; (2) the property's location in a well-established retail corridor that is well serviced by public transportation; (3) long-term tenancy coupled with a corporate guarantee by an investment-grade parent; and (4) the expected partial amortization that will take place over the remaining loan term.
One transaction (869107:11 Faubourg Boisbriand Shopping Centre Holdings Inc.) comprises one loan secured by a retail power centre in Boisbriand, Québec, a suburb of Montréal. The property is anchored by collateral tenants Decathlon, the Brick, and Sobeys and is shadow anchored by noncollateral tenants the Home Depot and Costco. The credit rating confirmations reflect (1) the expected stability of debt payments, given the strong operating history including the ability of the sponsor to re-lease vacant spaces; (2) a moderate LTV ratio; and (3) the expected partial loan amortization that will take place over the remaining loan term.
Morningstar DBRS' credit ratings on the applicable classes address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. Where applicable, a description of these financial obligations can be found in the transactions' respective press releases at issuance.
Morningstar DBRS' long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued. The Morningstar DBRS short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner.
ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.
A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (May 16, 2025) at https://dbrs.morningstar.com/research/454196.
All credit ratings are subject to surveillance, which could result in credit ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by Morningstar DBRS.
Notes:
All figures are in Canadian dollars unless otherwise noted.
The principal methodology is North American CMBS Surveillance Methodology (February 28, 2025), https://dbrs.morningstar.com/research/448963
Other methodologies referenced in this transaction are listed at the end of this press release.
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@morningstar.com.
The credit rating was initiated at the request of the rated entity.
The rated entity or its related entities did participate in the credit rating process for this credit rating action.
Morningstar DBRS had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.
This is a solicited credit rating.
For more information on Morningstar DBRS' policy regarding the solicitation status of credit ratings, please refer to the Credit Ratings Global Policy, which can be found in the Morningstar DBRS Understanding Ratings section of the website: https://dbrs.morningstar.com/understanding-ratings
DBRS Limited
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The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.
-- North American Single-Asset/Single-Borrower Ratings Methodology (February 28, 2025), https://dbrs.morningstar.com/research/448962
-- Morningstar DBRS North American Commercial Real Estate Property Analysis Criteria (September 19, 2024), https://dbrs.morningstar.com/research/439702
-- Legal and Derivatives Criteria for Canadian Structured Finance (June 24, 2025), https://dbrs.morningstar.com/research/456831
-- North American Commercial Mortgage Servicer Rankings (August 23, 2024), https://dbrs.morningstar.com/research/438283
A description of how Morningstar DBRS analyzes structured finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/410863.
For more information on this credit or on this industry, visit https://dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.
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