DBRS Confirms 15 Classes of Merrill Lynch Financial Assets Inc., Series 2005-Canada 16

DBRS has today confirmed the ratings on 15 classes of Merrill Lynch Financial Assets Inc., Series 2005-Canada 16 Commercial Mortgage Pass-Through Certificates as follows:

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

DBRS does not rate the $4.6 million first loss piece, Class M. All trends are Stable.

The rating confirmations reflect the stable performance of the transaction since issuance, with ten loans having been successfully repaid. Overall, the financial performance of the remaining 38 loans remains healthy, with a weighted-average debt service coverage ratio (DSCR) of 2.05 times (x) and a weighted-average debt yield of 23.7%. As of the June 2013 remittance report, the initial pool balance has been reduced by approximately 32.3%.

There are no loans in special servicing and there are two loans on the servicer’s watchlist, representing 1.5% of the current pool balance. These loans remain current but are being monitored for low DSCR and deferred maintenance issues.

DBRS has removed the shadow rating from the International Gateway Center loan (Prospectus ID #13), which represents 3.1% of the current pool balance. The loan was shadow-rated investment grade due to the credit quality of the largest tenant, Sobeys Inc. (Sobeys), which is currently rated BBB by DBRS. The removal of the shadow rating is due to the uncertainty surrounding Sobeys’ rating. DBRS placed Sobeys Under Review with Negative Implications on June 12, 2013, as a result of a proposed merger with Canada Safeway Limited. While the shadow rating has been removed, DBRS still considers the loan to be strong based on its financial performance, and as such, the shadow rating removal is considered credit neutral to the overall transaction. For more information on the recent rating action on Sobeys, please see the June 12, 2013, press release by clicking on the link under Related Research on the DBRS website, or under Associated Documents below.

DBRS maintains investment-grade shadow ratings on five loans in the transaction, which collectively represent 37.8% of the current pool balance. DBRS has today confirmed that the performance of these loans remains consistent with investment-grade loan characteristics.

As part of its review, DBRS analyzed the top 15 loans, the shadow-rated loans and the loans on the servicer’s watchlist, which comprise approximately 84.8% of the current pool balance.

DBRS continues to monitor this transaction in its Monthly CMBS Surveillance Report, with additional information on the DBRS viewpoint for this transaction, including details on the largest loans in the pool and loans on the servicer’s watchlist. The June 2013 Monthly CMBS Surveillance Report for this transaction will be published shortly. If you are interested in receiving this report, contact us at info@dbrs.com.

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 (November 2012), which can be found on our website under Methodologies.