DBRS Confirms 10, Upgrades 7 Classes of Schooner Trust, Series 2005-3

DBRS has today upgraded the ratings of seven classes of Schooner Trust, Series 2005-3 Commercial Mortgage Pass-Through Certificates as follows:

Class B to AA (high) from AA
Class C to AA (low) from A
Class D1 to BBB (high) from BBB
Class D2 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 the ten classes below:

Class A-1 at AAA
Class A-2 at AAA
Class XC1 at AAA
Class XC2 at AAA
Class XP1 at AAA
Class XP2 at AAA
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 17% since issuance. Additionally, as of the October 2010 remittance, the weighted-average debt service coverage ratio remains stable at 1.62x.

There are currently seven loans, representing 2.60% of the transaction, on the servicer’s watchlist; DBRS has added one of these loans to the DBRS HotList.

Prospectus ID#64, White Oak Industrial, is secured by a (approximately) 192,000 sf industrial property in London, Ontario, approximately 1 kilometer north of the intersection of Highway 401 and 402. The loan is on the servicer’s watchlist because a tenant representing 34,000 sf of the net rentable area (NRA) expired on August 31, 2010. The servicer has not received an update on the status of this tenant or the current occupancy rate at the property. DBRS will keep this loan on the HotList to monitor the leasing updates as the borrower provides them to the servicer. Despite these concerns, the loan benefits from a low loan per square foot of $13.

DBRS has applied a net cash flow stress of 20% across all loans in the pool and when comparing the DBRS required credit enhancement levels to the current credit enhancement at each bond class, the ratings upgrades are appropriate.

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.