DBRS Confirms Oakville Place and Southgate Shopping Centre at A (low) with a Stable trend

Dominion Bond Rating Service (“DBRS”) has today confirmed the rating of Oakville Place and Southgate Shopping Centre (“Oakville” and “Southgate” or the “Properties”) as indicated above at A (low) with a Stable trend.

The Properties’ credit profile remains stable, despite the potential near-term exposure to strategic changes for the Hudson’s Bay Company and Sears Canada Inc. (rated BB with an “Under Review with Developing Implications” rating action by DBRS) including possible store closures across Canada. Under DBRS’s extreme scenario with the loss of the aforementioned anchor tenants, debt service coverage would drop from 3.04 times and lie in a range to 2.15 times.

DBRS, however, believes the occurrence of such an event would likely be less dramatic and takes comfort in the fact that:

(1) Given that both Oakville and Southgate are well positioned within their respective markets, the Properties would be able to attract replacement tenants in a timely fashion and would likely achieve higher net effective rents than under the current anchor leases.

(2) Bondholders’ obligations are still well covered by cash flow if all anchor tenants (excluding Safeway at Southgate) were to vacate the Properties.

(3) The Properties have an excellent loan-to-value ratio with only Cdn$71.2 million in debt outstanding as at December 31, 2005.

(4) Bondholders have full recourse to Ivanhoe Cambridge I Inc. and Ivanhoe Cambridge II Inc. (together “Ivanhoe Cambridge”). DBRS views Ivanhoe Cambridge as a solid investment-grade credit.

Notwithstanding the above concern, the rating continues to be based on the favourable performance of the Properties and takes into consideration the following:

(1) Net operating income increased by approximately 16% for FYE2005, mainly due to the completion of the redevelopment and expansion project (the “Project”) at Oakville in 2005, which created an additional 31,000 square feet of commercial retail unit (CRU ) space. Correspondingly, interest coverage and debt service coverage increased to 3.85 times and 3.04 times, respectively. These financial metrics compare well to other DBRS-rated shopping centres and are strong for the current rating category.

(2) CRU sales per square foot were also strong for FYE2005 for the Properties (Cdn$527 for Oakville and Cdn$658 for Southgate), benefiting from Oakville’s enhanced market position and robust retail conditions in Southgate’s Edmonton market.

(3) The Properties have reasonable near-term CRU lease maturities over the 2006-2007 period providing support to cash flow stability. DBRS also notes that The Bay and Safeway leases at Southgate were recently renewed under similar terms and conditions. Although the 20,860 square foot space formerly occupied by IGA at Oakville remains vacant, DBRS believes this leasing challenge is manageable considering Oakville’s improved competitive strength. This could also provide an opportunity to achieve higher rents than under the previous lease or for other leasing endeavours.

Overall, DBRS expects the Properties’ credit profile to remain stable and continue to further benefit from the recent capital invested in Oakville and favourable operating conditions for Southgate expected in 2006.