DBRS Upgrades One Class, Confirms Five Classes of N-45 First CMBS Issuer Corporation, Series 2003-3

DBRS has today upgraded the Commercial Mortgage Backed Bonds, Series 2003-3, Class C to AAA (sf) from AA (low) (sf). In addition, DBRS has confirmed the remaining Commercial Mortgage Backed Bonds, Series 2003-3, as follows:

--Class A-2 at AAA (sf)
--Class B at AAA (sf)
--Class IO at AAA (sf)
--Class D at BBB (high) (sf)
--Class E at BBB (sf)

The trend on all Classes is Stable.

One loan remains in the transaction. The Place Bell Canada loan is secured by a Class A office tower in downtown Ottawa. A May 2012 servicer site inspection gave the property a quality rating of Excellent. Its loan exposure, on a per square foot basis, is $131. Bell Canada maintains a main office at the property, representing 47.6% of the NRA. Per the April 2012 rent roll, Bell Canada recently renewed leases on a large majority of their space at a rate of $23.50 psf. Public Works and Government Services occupies 22.3% of the NRA as the second-largest tenant, and also renewed several of its leases in 2011 and 2012. Altus InSite was marketing 3.4% of the NRA as available for sublease as of July 30, 2012. According to the April 2012 rent roll, less than 1.5% of the NRA was scheduled to roll in 2012 and 2013. This loan is scheduled to mature in December 2012 and is full recourse to H&R REIT, rated BBB by DBRS.

The rating actions reflect the continued stable performance of the loan. DBRS believes this loan is a good candidate for refinance, given the property’s desirability, as exhibited by recent commitment of major tenants, low leverage, healthy debt yield and strong sponsorship.

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

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The applicable methodologies are CMBS Rating Methodology (January 2012) and CMBS North American Surveillance Methodology (May 2011), which can be found on our website under Methodologies.