DBRS Confirms HOOPP Realty Inc. and 6763332 Canada Inc. – 44 Capital Boulevard Mortgage Loan

DBRS Limited (DBRS) confirmed the rating of BBB (low) on the 3.62% Mortgage Loan due January 4, 2019 (the Mortgage Loan), issued by a major Canadian financial institution.

The Mortgage Loan is secured by a first freehold mortgage of the lands and premises known as 44 Capital Boulevard in Edmonton, Alberta. 44 Capital Boulevard is an institutionally owned and managed Class A multi-tenant office property featuring 371,698 square feet of net rentable area that is 93.8% leased to investment-grade tenants.

The Mortgage Loan was made to HOOPP Realty Inc. and 6763332 Canada Inc. each as to their undivided 50% ownership interest. The Mortgage Loan is subject to a 3.62% interest rate per annum, calculated and compounded semi-annually, not in advance, for a term maturing on January 4, 2019, and a 25-year amortization schedule. The Mortgage Loan had an outstanding balance of $59.3 million as of March 4, 2018.

Based on its own underwriting of the property cash flows, DBRS derived a stabilized net cash flow (NCF) that represents a term debt service coverage ratio (DSCR) that exceeds 1.48 times (x). The derived DSCR is expected to decrease to approximately 1.2x at the time of refinancing, as the projected amortization of the principal balance on the Mortgage Loan is not expected to be enough to offset the projected increase in the cost of financing in a stressed scenario.

DBRS’s rating reflects the stability of the NCF provided by the high tenant quality during the term of the Mortgage Loan, the refinance risk and the derived DBRS loan-to-value ratio, which collectively support the BBB (low) rating.

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

The principal methodology is the North American Single-Asset/Single-Borrower Methodology, which can be found on dbrs.com under Methodologies.

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.

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.

The full report providing additional analytical detail is available by clicking on the link under Related Research below or by contacting us at info@dbrs.com.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.