Regional bank failures in the United States have had little fallout for Canadian commercial landlords listed on the TSX. A newly released commentary from the credit rating service, DBRS Morningstar, reports that only two issuers count the distressed institutions — Silicon Valley Bank and Signature Bank — among their tenants and, in both cases, they occupy a minimal fraction of the affected portfolios.

One of the affected landlords accommodates one of Signature Bank’s regional offices with a scale of occupancy considered “immaterial” to the company’s bottom line. The other landlord is deemed in good position to mitigate “modest exposure” to the insolvent tenancy.

“The leased space was recently renovated with considerable tenant improvements and the underlying asset is in an attractive market,” the DBRS Morningstar commentary notes. “The outcome for Signature Bank remains uncertain while under receivership, but the impact on the issuer is manageable.”

Looking across the broad range of listed real estate companies, about two-thirds have few finance sector tenants of any kind. This includes several real estate investment trusts (REITs) focused on industrial and multifamily properties. Among the remainder, financial tenants are predominantly large and stable players, categorized as systematically important banks (SIBs).

“We view these exposures as relatively low risk,” DBRS Morningstar confirms. “Regional banks and financial institutions, where most of the distress is focused, represented a small portion of our ratings universe’s largest tenants.”