DBRS Upgrades Nine Classes of Real Estate Asset Liquidity Trust, Series 2004-1

DBRS has today upgraded nine classes of Real Estate Asset Liquidity Trust, Commercial Mortgage Pass-Through Certificates, Series 2004-1 as follows:

Class B from AA to AAA
Class C from A to AA
Class D1 from BBB to A
Class D2 from BBB to A
Class E1 from BBB (low) to A (low)
Class E2 from BBB (low) to A (low)
Class F from BB (high) to BBB
Class G from BB to BBB (low)
Class H from BB (low) to BB

In addition, DBRS has confirmed six classes as follows:

Class A-1 at AAA
Class A-2 at AAA
Class X at AAA
Class J at B (high)
Class K at B
Class L at B (low)

All trends for the rated classes of this transaction are Stable.

DBRS does not rate the $3.8 million first loss piece, Class M.

The pool collateral has been reduced by 40.8% with the current pool balance at approximately $237 million.

The rating action reflects the increased credit enhancement and the defeasance of eight loans (17.4% of the pool). Overall, financial performance for the remaining collateral is strong, with a weighted-average debt service coverage ratio (WADSCR) of 1.80x and a weighted-average loan-to-value (WALTV) of 62.6%. In addition, DBRS reviewed the six loans (12% of the pool) on the servicer’s watchlist and has not placed any of those loans on the DBRS HotList. All 50 remaining loans in the transaction are current.

Prospectus ID#54, Deer Valley Station, is in special servicing and transferred to the special servicer in July 2009 because the borrower filed for bankruptcy protection. DBRS has been notified that the property has been turned over to a new general partner and is awaiting the details of this transfer. The loan remains current and has performed well since issuance. The YE2009 OSAR is reflective of a 15.6% debt yield which DBRS considers healthy.

DBRS has applied a net cash flow (NCF) stress scenario of 20% across all the loans in the pool and the resulting DBRS required credit enhancement levels, when compared to the current credit enhancement levels to the bonds, warrant the ratings upgrades.

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.