DBRS Confirms 11, Upgrades Five Classes of Schooner Trust, Series 2005-4

DBRS has today upgraded the ratings of five classes of Schooner Trust Commercial Mortgage Pass-Through Certificates, Series 2005-4 as follows:

Class C to A (high) from A
Class D to BBB (high) from BBB
Class E to BBB from BBB (low)
Class F to BBB(low) from BB (high)
Class G to BB (high) from BB

Additionally, DBRS has confirmed the ratings of 11 classes as follows:

Class A-1 at AAA
Class A-2 at AAA
Class XP-1 at AAA
Class XC-1 at AAA
Class XP-2 at AAA
Class XC-2 at AAA
Class B at AA
Class H at BB (low)
Class J at B (high)
Class K at B
Class L at B (low)

The ratings upgrades reflect the increased credit enhancement to the bonds from a collateral reduction of approximately 29% since issuance. Fifteen loans have paid out of the pool since September 2005. Additionally, as of the September 2010 remittance, the weighted-average debt service coverage ratio remains stable at 1.66x.

There are currently three loans representing 13.08% of the transaction on the servicer’s watchlist, however, DBRS has not added any of these loans to the DBRS HotList. Given the current debt yields and strong performance, DBRS believes the risk surrounding the servicer watchlisted loans is mitigated.

DBRS has added one loan, Milliken Crossing Shopping Centre (5.97% of the pool) to the DBRS HotList because the YE2009 net cash flow (NCF) has declined 21% since issuance. The loan continues to cover at a 1.14x DSCR, however, the debt yield, at 8.06%, is not considered stable.

DBRS has applied a NCF stress of 20% across all the loans in the pool and any potential losses associated with the loans resulting from a default would be contained to the first loss piece.

DBRS continues to monitor this transaction on a monthly basis in the Global CMBS Monthly Surveillance report, which can provide more detailed information on the individual loans in the pool.

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

The applicable methodologies are CMBS Rating Methodology and CMBS Surveillance, which can be found on our website under Methodologies.