DBRS Upgrades Four Classes and Confirms Ten Others of Solar Trust, Series 2003-CC1

DBRS has today upgraded the ratings of four classes of Solar Trust commercial mortgage pass-through certificates, Series 2003-CC1 as follows:

-- Class D-1 to AA (sf) from A (high) (sf)
-- Class D-2 to AA (sf) from A (high) (sf)
-- Class E to A (high) (sf) from A (sf)
-- Class F to A (sf) from A (low) (sf)

DBRS has also confirmed the other classes in the transaction as follows:

-- Class IO-1 at AAA (sf)
-- Class IO-2 at AAA (sf)
-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class B at AAA (sf)
-- Class C at AAA (sf)
-- Class G at BBB (sf)
-- Class H at BBB (low) (sf)
-- Class J at BB (low) (sf)
-- Class K at B (sf)

DBRS does not rate the $7 million first loss piece, Class L. All trends are Stable.

The rating action reflects both a significant increase in credit enhancement caused by collateral reduction (amortization and loan maturities) and the defeasance of six loans (5.5% of the current pool balance). Additionally, while there are five loans (3% of the pool) on the servicer’s watchlist, there are no loans on the DBRS HotList. As of the April 2011 remittance report, there is one loan in special servicing.

The DBRS analysis included an in-depth look at the top ten loans in the transaction, the loans on the servicer’s watchlist, the loans maturing in 2011 and the specially serviced loan. Cumulatively, these loans represent approximately 53.5% of the current pool balance.

Prospectus ID#49, 511 Millway Avenue is secured by a 65,000 sf industrial property located in Vaughan, Ontario and transferred to the special servicer in January 2011 because it was reported that there is an unapproved second mortgage registered against the property. According to the special servicer, the borrower remains current on all payments with respect to the trust loan. Additionally, the value at issuance was $4 million and when looking at the YE2009 reported net cash flow and using a conservative cap rate, this would imply a value of just under $4 million today. Based on the trust loan balance of approximately $2 million, the trust loan appears to be well protected. In addition, the leverage point, on a per square foot basis, is reasonable at approximately $30.

DBRS has run various cash flow stress scenarios where up to 25% cash flows stresses were applied across the entire transaction. As more loans report YE2010 financials, we see that these cash flow stresses are not exactly reflective of the actual cash flows the assets are generating, however, in running these stressed scenarios and comparing the DBRS required credit enhancement levels to the current increased credit enhancement levels, across the transaction, the ratings upgrades are appropriate.

For further detail and loan level analysis, please refer to the corresponding CMBS Monthly Surveillance report on www.dbrs.com

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.