DBRS Confirms All Classes of Merrill Lynch Financial Assets Inc., Series 2004-Canada 14

DBRS has today confirmed all eighteen classes of Merrill Lynch Financial Assets Inc., Series 2004-Canada 14 as follows:

Classes A-1, A-2, XP-1, XP-2, XC-1, XC-2 at AAA (sf)
Class B at AA (high) (sf)
Class C at A (high) (sf)
Class D-1 at A (low) (sf)
Class D-2 at A (low) (sf)
Class E-1 at BBB (high) (sf)
Class E-2 at BBB (high) (sf)
Class F at BBB (sf)
Class G at BB (sf)
Class H at BB (low) (sf)
Class J at B (high) (sf)
Class K at B (sf)
Class L at B (low) (sf)

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

DBRS does not rate the $5.1 Million first loss piece, Class M.

The rating action confirmations are reflective of stable performance. Overall, the financial performance for the remaining 32 loans is strong, with a weighted-average debt service coverage ratio (WADSCR) of 1.81x and a weighted-average loan-to-value (WALTV) of 58.2%, compared with 1.57x and 63% at issuance.

The largest loan in the pool, 5000 Yonge Street Senior Interest (Prospectus ID#1, 31.3% of the current pool balance), is secured by a Class A office property built in 2004 and located in Toronto.,.The two largest tenants at the property represent 55% of the NRA and have long term leases through 2019..Based on the YE2010 financials, performance has remained strong with a DSCR of 1.63x and a 100% occupancy rate,, an improvement over 1.45x and 88% at issuance. DBRS maintains the AAA shadow rating for this loan based on the strong tenancy and loan specific credit enhancement provided by the $19 million subordinate B-note.

In addition, DBRS maintains shadow ratings for InnVest Hotel Portfolio 2 (Prospectus ID#3, 9.32% of the current pool balance) at A (low) and the U-Haul Portfolio (Prospectus ID#3, ID#7, ID#26,ID#32 ID#36, ID#40, ID#41, ID#42, ID#45, ID#49, and ID#50, collectively 6.85% of the current pool balance) at BBB (high).

There are four loans on the servicer’s watchlist representing 8.57% of the current pool balance. All four of these loans have 100% recourse to their respective borrowers. The largest loan on the servicer’s watchlist is Four Points Sheraton Halifax (Prospectus ID#10, 4.84% of the current pool balance). This loan was added to the watchlist in May 2011 for a low DSCR due to a decline in occupancy and RevPar. The loan is secured by a 177-room limited-service hotel built in 2001. An October 2010 servicer site inspection gave the asset a rating of Good. DBRS will continue to monitor this loan.

The remaining three loans on the watchlist are part of a cross-collateralized and cross-defaulted portfolio sponsored by More Custom Homes, Ltd.. The portfolio consists of ten multifamily properties located in Windsor, Ontario. The three loans on the servicer’s watchlist are Carnegie Apartments (Prospectus ID#21, 1.75% of the current pool balance), King Edward Apartments (Prospectus ID#24, 1.54% of the current pool balance), and St. Rose Apartments (Prospectus ID#47, 0.44% of the current pool balance). On average, these three loans have experienced a NCF decline of 20% since issuance; however, YE2010 financials indicate an improvement in the NCF over YE2009. Two of the three loans have been on the watchlist since August 2007, and all three loans have remained current on their payment obligations. These loans benefit from the cross-collateralized nature of seven other loans within the transaction.

DBRS continues to monitor this transaction on a monthly basis in the Monthly CMBS Monthly Surveillance Report, which can provide more detailed information on the individual loans in the pool.

Note:
All figures are in Canadian dollars unless otherwise noted.

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