DBRS Downgrades One Class and Confirms 18 Classes of Merrill Lynch Mortgage Trust 2005-CIP1

DBRS has today downgraded Class F of Merrill Lynch Mortgage Trust 2005-CIP1 (the Trust) to C (sf) from CCC (sf). DBRS has also confirmed the following classes of Merrill Lynch Mortgage Trust 2005-CIP1 as follows:

-- Classes A-2, A-3A, A-3B, A-4, A-SB, XC and XP at AAA (sf)
-- Class A-M at AA (sf)
-- Class A-J at BBB (sf)
-- Class B at BB (high) (sf)
-- Class C at BB (low) (sf)
-- Class D at B (low) (sf)
-- Class E at CCC (sf)
-- Classes G, H, J, K and L at C (sf)

Three pivotal loans that had been in special servicing at the time of the last full surveillance review have been modified. The borrower for the 2801 Network Boulevard loan (Prospectus ID#20, 1.3% of the current pool balance) was issued a two-year forbearance, and the loan has been transferred back to the master servicer. Highwoods Portfolio57 (Prospectus ID#2, 10.0% of the current pool balance) and University Village (Prospectus ID#12, 1.9% of the current pool balance) were each restructured with a subordinate B-note. DBRS’s assumption is that the balance of the B-notes will ultimately be lost to the Trust. The losses associated with these two B-notes in addition to the losses expected from the liquidation of loans in special servicing totals approximately $70 million, which would impact Class F. Highwoods Portfolio57 (Prospectus ID#2) and University Village (Prospectus ID#12) remain in special servicing.

Two loans in the original top ten are on the servicer’s watchlist because of a low debt service coverage ratio (DSCR), but are not deemed by DBRS to pose an immediate threat to the pool’s overall stability. Residence Inn Hotel Portfolio (Prospectus ID#6, 3.0% of the current pool balance) is secured by four extended-stay Residence Inn hotels located in Texas, New York and Florida. The YE2010 DSCR was reported to be 1.11x, a figure likely driven by a relatively low occupancy rate of 56% for the same time frame. According to Q3 2011 financials, performance has improved slightly. As of September 2011, the DSCR and occupancy rate were reported to be 1.27x and 73%, respectively, for the trailing twelve months.

The second top-ten loan currently on the servicer’s watchlist is Equity Lifestyle Portfolio (Prospectus ID#8, 2.4% of the current pool balance). This loan is secured by three RV resort communities located in New York and New Hampshire. Performance at the properties was originally projected to fluctuate, due to the seasonality of this particular property type. There were over $10.0 million in total reserves for the loan as of January 2012. This loan has been on the watchlist since May 2006 and has never been delinquent.

The cumulative losses for this transaction, to date, have resulted in the full principal losses to Classes Q, P and N and have reduced the balance of Class M to $1.9 million. DBRS currently projects that potential losses to loans in special servicing will be contained to Class F. DBRS continues to monitor this transaction on a monthly basis, with increased focus on these pivotal loans.

Notes:
All figures are in U.S. 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.