DBRS Upgrades One Class and Confirms 13 Classes of Schooner Trust, Series 2005-4

DBRS has today upgraded one class of the Schooner Trust Commercial Mortgage Pass-Through Certificates, Series 2005-4 transaction as follows:

-- Class B to AAA (sf) from AA (sf)

DBRS has also confirmed the ratings of 13 classes as follows:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class XC-1 at AAA (sf)
-- Class XC-2 at AAA (sf)
-- Class C to A (high) (sf)
-- Class D to BBB (high) (sf)
-- Class E to BBB (sf)
-- Class F at BBB (low) (sf)
-- Class G to BB (high) (sf)
-- Class H at BB (low) (sf)
-- Class J at B (high) (sf)
-- Class K at B (sf)
-- Class L at B (low) (sf)

Class C was confirmed with a Positive trend. All other trends are Stable.

These ratings actions reflect the strong overall performance of the pool overall, with a weighted-average debt service coverage ratio (DSCR) of 1.56 times (x) and a weighted-average debt yield of 13.35%, as calculated on the outstanding trust balances as of the September 2012 remittance report and the most recent year-end NCF figures for each loan in the trust. There are 59 of the 76 original loans remaining in the pool with a collateral reduction of 34.19%. There is one defeased loan, representing 4.34% of the outstanding pool balance. The majority of the loans in the pool are scheduled to mature in 2015 with 58 loans, representing 99.08% of the pool, scheduled to for maturity in that year.

As of the September 2012 remittance, there are five loans on the servicer’s watchlist, representing 15.91% of the current pool balance; two of these loans, representing 14.15% of the pool, are in the top 15. All of the loans on the watchlist remain current.

Prospectus ID #2 (Southland Mall), representing 10.37% of the pool, is the largest loan remaining in the pool. The loan is secured by a 437,762 sf anchored retail centre in Regina, Saskatchewan. The loan was added to the servicer’s watchlist after the anchor tenant Walmart (33% NRA) vacated the property in February 2010; Walmart continued to pay rent until its lease expiry in January 2011. As a result, DSCR decline lagged the occupancy and dropped from a 1.60x at YE2010 to a 1.40x at YE2011. The most recent report occupancy was 61.77%, as of June 2012. According to the servicer, the borrower has a conditional deal with a national tenant, but a finalized agreement has not yet been reached. Despite the vacancy concern with departure of Walmart in 2010, the loan has remained current and displays healthy credit metrics. The loan is shadow-rated investment grade because of the full recourse guarantee to RioCan REIT.

There are a total of seven loans shadow-rated investment grade by DBRS remaining in the pool, representing a combined 22.90% of the outstanding balance.

For further information on the DBRS viewpoint for this pool, including commentary on the largest loans, please see the August 2012 Monthly Surveillance Report for this transaction, which will be published shortly on the DBRS website at www.dbrs.com.

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

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.

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