DBRS Downgrades One Class of Merrill Lynch Mortgage Trust 2005-CIP1

DBRS has today downgraded the following class of the Merrill Lynch Mortgage Trust 2005-CIP1 as follows:

-Class P to D (sf) from C (sf)

The downgrade follows realized losses incurred on the trust which resulted from one loan being liquidated out of the trust and one loan being modified in June 2011.

University Village (Prospectus ID#12, 1.75% of the current pool balance) was transferred to the special servicer after the borrower requested a return to interest-only (IO) debt-service payments because of cash flow difficulties at the property. The lender and borrower have reportedly finalized a modification of the loan terms, which includes an A/B note split of the original loan and an extension of the IO period. A realized loss of $634,441 was applied to the trust as part of the June 13, 2011 remittance report. The loan is still delinquent and remains in special servicing. Collateral for the loan is an anchored retail property built in 1997 in Riverside, California. Total advances outstanding on this loan exceed $3 million, which is greater than one year’s debt service. DBRS anticipates additional losses as the special servicer fees and recoveries are collected in the coming months.

Alano Plaza (Prospectus ID#97) was transferred to the special servicer in February 2011 due to imminent default. The loan was secured by a small, unanchored retail property in Las Vegas. At YE2009, the property was 85% occupied and operating at a 0.92x DSCR, compared with 92% occupancy and a DSCR of 1.38x at issuance. Cash flow fell into further decline throughout 2010 as a result of decreasing rents, increased vacancy, and deterioration of the Las Vegas retail market. The DSCR at YE2010 was reported to be 0.66x. According to the special servicer, a note sale was pursued over foreclosure in order to maximize recovery to the trust. The June 2011 liquidation of this loan incurred a realized loss of $2.5 million to the trust.

Additional expenses associated with one previously liquidated loan, Kintetsu World Express (Prospectus ID#66), have also contributed to the realized loss included in the June 2011 remittance report.

The largest loss to the trust to date is attributable to Holiday Inn Mission Bay Sea World (Prospectus ID#13) which was resolved in a real estate-owned (REO) sale and caused a realized loss to the trust of $19.6 million at the time of the September 2010 remittance report. The disposition of this loan resulted in a 76% reduction to the principal balance of the unrated Class Q certificate. The loans discussed above have contributed to the elimination of the remainder of Class Q as well as the $1.2 million loss experienced by Class P.

Since the time of the last review of this transaction in January 2011, six loans have transferred to special servicing: Coco Centre (Prospectus ID#65), Park Forest (Prospectus ID#113), Sunrise Plaza (Prospectus ID#89), Hampton Inn Newton (Prospectus ID#35), Hampton Inn Great Valley (Prospectus ID#58), and Kirkwood Bend Office (Prospectus ID#30). These loans cumulatively comprise 3.09% of the pool balance, as of the June 13, 2011 remittance report. As part of the continued surveillance on this transaction, these loans and the other loans currently in special servicing will be monitored for further developments.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is CMBS Rating Methodology and CMBS North American Surveillance Methodology, which can be found on our website under Methodologies.