DBRS Limited (DBRS Morningstar) assigned a rating of AA (low) with a Stable trend to BCI QuadReal Realty’s (BQR or the Issuer) $400 million 2.551% Senior Notes, Series 5 due June 24, 2026 (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.
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 bcIMC Realty Corporation (BRC; rated AA (low) with a Stable trend by DBRS Morningstar) that contain essentially the same terms and conditions as the Senior Notes, which 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.
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 proceeds from the issue of the Notes and cash on hand to make an Intercompany Loan to BRC, 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 will not be an Event of Default under the Indenture if the Issuer fails to comply with such obligations.
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.
All figures are in Canadian dollars unless otherwise noted.
The principal methodologies are Rating Entities in the Real Estate Industry (April 23, 2021; https://www.dbrsmorningstar.com/research/362015), DBRS Morningstar Criteria: Guarantees and Other Forms of Support (May 31, 2021; https://www.dbrsmorningstar.com/research/379424); and DBRS Morningstar Criteria: Commercial Paper Liquidity Support for Nonbank Issuers (March 9, 2021; https://www.dbrsmorningstar.com/research/375001), which can be found on dbrsmorningstar.com under Methodologies & Criteria. Other applicable methodologies include the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (February 3, 2021; https://www.dbrsmorningstar.com/research/373262).
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.
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