DBRS Assigns Ratings to Calloway REIT (Barrie) Inc. – Barrie South Smart Centre Mortgage Loans

DBRS has today assigned ratings of A (high) to the 7.500% Mortgage Loan due March 1, 2018 (Mortgage Loan 1) and the 4.415% Mortgage Loan due March 1, 2018 (Mortgage Loan 2; together with Mortgage Loan 1, the Mortgage Loans) by a major Canadian financial institution in relation to the Barrie South Smart Centre (the Subject Property) located at the intersection of Highway 400 and Mapleview Drive in Barrie, Ontario.

Mortgage Loan 1 was initially made in July 2005, subject to an interest rate of 7.500% per annum, calculated monthly and compounded semi-annually, not in advance, for a term maturing on March 1, 2018. Mortgage Loan 2 was advanced on November 1, 2010, with an interest rate of 4.415% per annum, calculated monthly and compounded semi-annually, not in advance, for a term maturing on March 1, 2018, with a 25-year amortization period. Mortgage Loan 1 and Mortgage Loan 2 had an outstanding balance of $8,470,502 and $20,490,275, respectively, as of October 1, 2013. The Mortgage Loans are secured by a fee interest in Barrie South Smart Centre (the Subject Property). At maturity, the outstanding balance under the Mortgage Loans will have amortized more than 20%. Based on a January 2011 valuation by a reputable appraiser, the going-in loan-to-value (LTV) of the property is around 42%.

The Mortgage Loans are secured by a fee interest in the Subject Property, which is anchored by Wal-Mart, Sobeys, Winners, La-Z-Boy, Michaels and PetSmart, for a total area of 374,641 square feet.

Based on its own underwriting of the property cash flows, the DBRS derived term debt service coverage ratio (DSCR) exceeds 1.6 times (x). The derived DSCR is also expected to exceed 2.0x at the time of refinancing, as the projected amortization of the principal balance on the Mortgage Loans will most likely more than offset the projected increase in the cost of financing.

DBRS assumes that the Borrower will refinance in 2018 to pay off the principal remaining on the Mortgage Loans, and the ratings consider the ability of the Borrower to refinance at the end of the term. The derived DBRS LTV of 61%, the derived DBRS term DSCR above 1.6x and the amortization collectively support the A (high) ratings.

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

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 to the right under Related Research or by contacting us at info@dbrs.com.