DBRS Upgrades Four Classes and Confirms of N-45 First CMBS Issuer Corporation, Series 2003-3

DBRS has today upgraded the ratings of four Classes of N-45 First CMBS Issuer Corporation, Series 2003-3 as follows:

--Class B to AAA (sf) from AA (sf)
--Class C to AA (low) (sf) from A (sf)
--Class D at BBB (high) (sf) from BBB (low) (sf)
--Class E at BBB (sf) from BB (high) (sf)

In addition, DBRS has confirmed the ratings of two Classes as follows:

--Class A-2 at AAA (sf)
--Class IO at AAA (sf)

Since issuance, the transaction has experienced a collateral reduction of approximately 71.2% and the weighted-average debt service coverage ratio, as of the September 2011 cut-off, was 1.54x. Since the last DBRS deal review in October 2010, the collateral has been reduced by 51.2%, as a result of the repayment of the Fifth Avenue Place loan, in addition to the continued amortization on the Place Bell Canada loan.

The transaction is now secured by one loan, Place Bell Canada, which as of the September 2011 remittance report has an outstanding principal balance of approximately $133.4 million. The loan is secured by a 990,000 sf office property in Ottawa, Ontario. As of the May 2011 rent roll, the property was 99% occupied, consistent with the occupancy rate at the last DBRS review in October 2010. The property performance benefits from long term leases to the two largest tenants. The largest tenant at the subject is Bell Canada (rated BBB by DBRS) with a lease expiring in 2022, ten years beyond the loan maturity. The second and third largest tenants are Public Works and Government Services Canada (rated AAA by DBRS), with leases expiring between 2016 and 2020. The loan matures in December 2012 and benefits from a healthy debt yield of 15.8%, based on the YE2010 net cash flow. The loan has full-recourse to H&R REIT (rated BBB by DBRS).

The upgrades reflect the increased credit enhancement from the significant collateral reduction, in addition to the stable performance of the remaining loan in the transaction.

There are no loans in special servicing, on the servicer�fs watchlist or on the DBRS HotList.

DBRS continues to monitor this transaction on a monthly basis, with ongoing information being available in the Monthly CMBS Surveillance Report.

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

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