DBRS Confirms 16 Classes of Schooner Trust, Series 2005-4

DBRS has today confirmed the ratings of 16 Classes of Schooner Trust Commercial Mortgage Pass-Through Certificates, Series 2005-4 as follows:

• Class A-1 at AAA (sf)
• Class A-2 at AAA (sf)
• Class XP-1 at AAA (sf)
• Class XP-2 at AAA (sf)
• Class XC-1 at AAA (sf)
• Class XC-2 at AAA (sf)
• Class B at AA (sf)
• Class C to A (high) (sf)
• Class D to BBB (high) (sf)
• Class E to BBB (sf)
• Class F at BBB (low) (sf)
• Class G to BB (high) (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 are Stable.

The ratings confirmations reflect the increased credit enhancement to the bonds from a collateral reduction of approximately 31% since issuance. Sixteen loans have paid out of the pool since issuance. The weighted-average debt service coverage ratio is 1.66x.

At issuance, DBRS shadow-rated seven loans, currently representing 22.58% of the transaction, as investment-grade. DBRS has today confirmed that the performance of these individual loans remain consistent with investment-grade loan characteristics.

There are currently three loans, representing 13.18% of the transaction, on the servicer�fs watchlist. These loans remain current but are reporting performance issues and have been placed on the servicer�fs watchlist. Two of these loans are highlighted below.

The Southland Mall loan (10.27% of the current pool balance) is secured by a shopping centre in Regina, Saskatchewan. It was placed on the servicer�fs watchlist because the former anchor tenant, Wal-Mart, who occupied 33% of the NRA, vacated in 2010. Wal-Mart did continue to pay rent until the expiration of its lease in January 2011. The property is 62% occupied, as of March 2011, down from 95% at YE2010. The servicer has reported that the borrower has been in discussions to lease the former Wal-Mart space but nothing has materialized to date. The YE2010 OSAR reported the DSCR to be 1.60x, but the DSCR is likely to decrease as the expiration of the Wal-Mart lease is recognized. Despite the vacancy concern, the loan has remained current since Wal-Mart�fs departure, and has strong sponsorship in RioCan REIT (rated BBB (high) by DBRS) who provides a full-recourse guaranty.

The Newport Centre III loan (2.24% of the current pool balance) is secured by an office property in downtown Winnipeg. It was added to the servicer�fs watchlist due to a low occupancy rate, which fell to 68% in May 2010. Based on the January 2011 rent roll, three new tenants have signed leases at the property, and the occupancy rate has improved to 80%. The YE2010 DSCR was low at 0.94x, but that figure is likely to rise in 2011 with the improvement in the occupancy rate.

In addition to the three loans on the servicer�fs watchlist, DBRS has added one loan, Dundeal Properties, (3.75% of the current pool balance) to the DBRS HotList because of a low YE2010 NCF. The NCF has declined 45% since issuance due to the bankruptcy of the previous tenant who occupied both of the flex industrial properties that serve as collateral for the loan. As a result, the YE2010 DSCR was 0.76x, a decline from 1.49x at YE2009. The borrower has signed two tenants, representing 60% of the NRA, according to a March 2011 rent roll. Since that time however, one of the tenant�fs, who occupied 15% of the NRA, lease has expired. DBRS is waiting an update from the servicer regarding the status of the tenant. DBRS will continue to monitor the loan closely.

DBRS has removed Milliken Crossing Shopping Centre (6.06% of the current pool balance) from the DBRS HotList. The loan was placed on the HotList in October 2010 due to a YE2009 NCF that was 21% below the issuer�fs underwritten NCF. The YE2010 NCF improved 15% over the previous year and the property�fs occupancy rate improved slightly to 95%. These marked improvements, along with the fact that there is ample time for this loan to continue its improved performance before its 2015 maturity date, have resulted in it being removed from the DBRS HotList.

DBRS continues to monitor this transaction on a monthly basis in the Monthly CMBS 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, which can be found on our website under Methodologies.