DBRS Places Three Classes Under Review with Positive Implications in N-45 First CMBS Issuer Corporation, Series 2002-1

DBRS has today placed the following classes of N-45 First CMBS Issuer Corporation, Series 2002-1 Under Review with Positive Implications:

-- Class D rated AA (sf)
-- Class E rated A (low) (sf)
-- Class F rated BB (sf)

Two of the original 23 loans in this transaction remain outstanding, as of the September 2012 remittance. The largest loan is Maison Trust Royal (64.6% of the current pool balance). This loan is secured by an office property in the financial district of Montréal. Based on the June 2012 rent roll, the property was 85.9% occupied. Royal Bank (14.4% of the NRA) and TELUS (10.7% of the NRA) are the two largest tenants at the property. All of Royal Bank’s space rolls in January 2015. TELUS operates on multiple leases, the earliest of which is scheduled to expire in November 2013. This loan is on the servicer’s watchlist because the whole loan DSCR for YE2011 was reported to be below the servicer’s 1.40x watchlist threshold. The loan has exhibited stable performance since issuance and the leverage point, on a psf basis, is low when considering the property type and location.

Complexe Raycom (35.4% of the current pool balance) is secured by an office property that consists of two ten-storey buildings in addition to a 200-stall parking deck. The property is located in suburban Montréal and was reported to be less than 1% vacant, according to a March 2012 rent roll. Hydro-Québec is the largest tenant, representing 21.6% of the NRA on various leases rolling in 2018. This loan is also on the servicer’s watchlist because the whole loan DSCR for YE2011 was reported to be below the servicer’s 1.40x watchlist threshold. In addition, this loan is scheduled to mature on December 1, 2012. The loan’s current debt yield is calculated at approximately 35%, and the loan benefits from a tight amortization schedule.

Overall, the deal has historically exhibited strong performance. The current weighted-average debt yield is 36.5% and both loans are secured by low-leverage Class A office properties located in a stable market. DBRS does not foresee any near-term credit risk in the underlying collateral, but plans to contact the servicer for clarification of operating statements received as part of this review and once clarified, will make an appropriate determination of the impact to the ratings.

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 (May 2011), which can be found on our website under Methodologies.