DBRS Morningstar Finalizes Provisional Rating of AA (low) on BCI QuadReal Realty’s Green Bonds

DBRS Limited (DBRS Morningstar) finalized its provisional rating of AA (low) with a Stable trend on BCI QuadReal Realty’s (BQR or the Issuer) Senior Notes, Series 2 (the Senior Notes). The rating assigned to this newly issued debt instrument is based on the rating of an already-outstanding debt series of the above-mentioned debt instrument. BQR issued $350 million of 1.747% Senior Notes, Series 2, due July 24, 2030.

DBRS Morningstar understands that the Senior Notes are issued as Green Bonds under the Green Bond Framework (the Framework) established by QuadReal Property Group Limited Partnership dated July 2020 in accordance with the Green Bond Principles (2018) (GBP) developed by the International Capital Market Association. The Issuer intends to use the net proceeds from the issue of the Senior Notes and cash on hand to make an Intercompany Loan to bcIMC Realty Corporation (BRC; rated AA (low) with a Stable trend by DBRS Morningstar), and BRC will use the proceeds of the Intercompany Loan to finance or refinance, in whole or in part, expenditures associated with Eligible Green Projects under the Framework.

Although the Issuer intends to use the net proceeds of this offering as described herein, it is not be an Event of Default under the Indenture if the Issuer fails to comply with such obligations.

The Senior Notes are direct senior obligations of BQR and rank ahead of any unsecured and unsubordinated indebtedness of the Issuer. The Senior Notes are secured by back-to-back Intercompany Loans to BRC that contain essentially the same terms and conditions as the Senior Notes; this allows the Senior Notes to carry the same AA (low) rating as BRC’s medium-term notes because of the equivalency of the two debt instruments. The Senior Notes of BQR are unconditionally guaranteed by Parkpool, a sister fund whose sole trustee is also British Columbia Investment Management Corporation, the sole trustee of BQR, and the guarantee ranks pari passu with all present and future unsecured obligations of Parkpool. In addition, other Property Affiliates with stabilized international real estate assets may, in the future, be designated by BQR as additional guarantors of the debt issued by BQR.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at: https://www.dbrsmorningstar.com/research/357792.

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

The principal methodologies are Rating Entities in the Real Estate Industry (June 4, 2020), DBRS Morningstar Criteria: Guarantees and Other Forms of Support (January 22, 2020), and DBRS Morningstar Criteria: Rating Corporate Holding Companies and Parent/Subsidiary Rating Relationships (November 25, 2019), which can be found on dbrsmorningstar.com under Methodologies & Criteria.

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.

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@dbrsmorningstar.com.

The rated entity or its related entities did 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.

Generally, the conditions that lead to the assignment of a Negative or Positive trend are resolved within a 12-month period. DBRS Morningstar trends and ratings are under regular surveillance.

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

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