DBRS Confirms All Classes of Solar Trust, Series 2003-CC1

DBRS has today confirmed the following classes of Solar Trust, Series 2003-CC1 as follows:

-- Class A-2 at AAA (sf)
-- Class B at AAA (sf)
-- Class C at AAA (sf)
-- Class IO-1 at AAA (sf)
-- Class IO-2 at AAA (sf)
-- Class D1 at AA (sf)
-- Class D2 at AA (sf)
-- Class E at A (high) (sf)
-- Class F at A (sf)
-- Class G at BBB (sf)
-- Class H at BBB (low) (sf)
-- Class J at BB (low) (sf)
-- Class K at B (sf)

The collateral in this transaction has been reduced by approximately 43.1% since issuance. As a whole, the pool has continued to perform well over time. The current weighted-average (WA) debt service coverage ratio (DSCR) and WA debt yield are 2.6 times (x) and 26.8%, respectively. In comparison, the WADSCR and WA debt yield for the pool at issuance was 1.5x and 12.5%, respectively. The top fifteen largest loans represent 66.3% of the current pool balance.

Approximately $127.9 million in outstanding debt in this deal is scheduled to be repaid by the end of 2012. This would pay down a significant portion of the remaining balance to Class A-2 and improve subordination levels to the bonds. The WADSCR and WA debt yield for reporting loans maturing in 2012 is 1.87x and 19.8%, respectively. These loans also have a WA loan-to-value ratio (LTV) of 52.9%. Based on these metrics, and the overall health of the pool, DBRS has changed the trends on Classes D1 through G to Positive. The trend on the remaining classes is Stable.

There are nine loans on the servicer’s watchlist, representing 14.5% of the current pool balance. TLC Building (Prospectus ID#30, 1.62% of the current pool balance) is the third largest loan currently on the servicer’s watchlist. The collateral is a 60,000 square foot office building in Mississauga, Ontario, which suffered a drop in occupancy when the sole tenant vacated. A replacement tenant was found to occupy 67% of the net rentable area (NRA) on a lease that is scheduled to expire in November 2012, concurrent with the loan’s scheduled maturity. This loan has recourse to the Canada Mortgage and Housing Corporation, a government-guaranteed entity.

Two loans of concern will be placed on the servicer’s watchlist with the May 2012 remittance. The first is Matheson Boulevard (Prospectus ID#9, 5.61% of the current pool balance), which is secured by a Class A office building located within the Airport Corporate Centre in Mississauga. As of a December 2011 rent roll, the property was 87.8% occupied; however, the largest tenant, Daimler Chrysler Financial, will be vacating its 24.3% of the NRA by May 1, 2012, bringing occupancy down significantly. Available space at the property is being marketed by Altus InSite. This loan is scheduled to mature in October 2012.

500-522 King Street (Prospectus ID#14, 4.67% of the current pool balance) is secured by an office property with a retail component, comprising a total of approximately 130,000 square feet in the King West Central market of downtown Toronto. Although the property was 100% occupied, according to the most recent rent roll, Cossette Communication Group, representing 73.5% of the NRA, will be vacating its space by May 1, 2012. The space is already being marketed by Altus InSite. The success of finding one or more tenants to lease this space will likely play a role in this loan’s ability to refinance ahead of its scheduled August 2012 maturity. A mitigating factor is that the sponsor, Allied Properties REIT, provides recourse for this loan. Allied Properties REIT’s Toronto portfolio, comprising 3.2 million square feet, was 97% occupied at YE2011. Additionally, property is very well located and well maintained.

Notes:
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.