DBRS Downgrades One Class of Merrill Lynch Financial Assets Inc., Series 2001-Canada 5

DBRS has today downgraded the Commercial Mortgage Pass-Through Certificates, Series 2001-Canada 5, Class F issued Merrill Lynch Financial Assets Inc., Series 2001-Canada 5 (the Trust) to D (sf) from C (sf).

The downgrade follows realized losses incurred by the Trust following the liquidation of Skeena Mall (Prospectus ID#8) in January 2012.

The Skeena Mall loan was secured by a 151,000 square foot (sf) anchored shopping centre located in Terrace, British Columbia. The asset was anchored by Zellers, which vacated the space in 2003. The property is located in a remote area, roughly 900 miles north of Vancouver, that was hit hard by the closing of its major employer in 2001. This loan transferred to special servicing in February 2009 and was scheduled to mature in February 2011. The asset was recently sold and liquidated out of the pool with the January 2012 remittance. The realized trust loss associated with this loan is $4.4 million, representative of a 71% loss severity. Any additional recovery from the loan’s guarantee is not expected to change DBRS’s assessment of the ratings of the bonds.

There are five loans remaining in the pool, including a roll-up of three cross-collateralized and cross-defaulted loans, one of which is currently on the servicer’s watchlist because of the departure of two major tenants.

DBRS will be conducting a full surveillance review of this transaction in the coming months.

Notes:
All figures are in Canadian 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.