DBRS Upgrades Five Classes of Merrill Lynch Financial Assets Inc., Series 2001-Canada 6

DBRS has today upgraded five classes of Merrill Lynch Financial Assets Inc., Commercial Mortgage Pass-Through Certificates, Series 2001-Canada 6 as follows:

Class E from AA (low) to AAA
Class F from A (low) to AA
Class G from BBB to A
Class H from BB (low) to BBB
Class J from B (high) to BB

In addition, DBRS has confirmed five classes as follows:

Class A-2 at AAA
Class B at AAA
Class C at AAA
Class D at AAA
Class X at AAA

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

DBRS does not rate the $3.98 Million first loss piece, Class K.

The pool collateral has been reduced by 47.5% with the current pool balance at approximately $139.4 million.

The rating action reflects a strong outlook for the pool, primarily because of the successful maturity of 17 loans since issuance (35.48% of the pool at issuance) and the defeasance of five loans, including two of the loans currently in the Top Ten for the transaction, Prospectus ID#12, The National Building, representing 4.42% of the current pool balance, and Prospectus ID#13, Shaughnessy Village, representing 4.10% of the current pool balance. Overall, financial performance for the remaining collateral is strong, with a weighted-average debt service coverage ratio (WADSCR) of 1.62x and a weighted-average loan-to-value (WALTV) of 69.9%. In addition, the weighted-average debt yield (WADY) is strong at 12.56%. All 23 loans remaining in the pool are current.

There is only one loan on the servicer’s watchlist, Prospectus ID#40, Elmira Road, representing 0.71% of the current pool balance. The loan’s collateral is a two-building industrial property with a combined 40,427 sf of rentable space, located in Guelph, Ontario, approximately 30 kilometers northeast of Kitchener, Ontario. The loan is on the servicer's watchlist for a low Q2 2010 DSCR of 0.40x. The property has experienced fluctuations in occupancy over the last two years after losing the largest tenant (38% of the NRA) in January 2010. Part of the space was re-leased, but overall occupancy had fallen to 76% as of June 30, 2010 from 100% at YE2009. 15% of the NRA is set to expire in July 2011; the servicer reports that the borrower is in discussions with that tenant to renew and expand into the 24% currently vacant at the property. Also affecting cash flows at the property, the property's largest tenant with 16% of the NRA, was granted a 70% reduction in their rent at lease expiry of November 2009 and is now occupying their space on a month to month basis with a 90 day exit clause. DBRS will continue to monitor this loan for occupancy and DSCR issues; the loan remains current.

There are no loans on the DBRS HotList.

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.