DBRS Downgrades Five Classes in Merrill Lynch Mortgage Trust 2005-CIP1

DBRS has today downgraded Merrill Lynch Mortgage Trust 2005-CIP1’s Class E certificates to C (sf) from CCC (sf) and its Class F, G, H and J certificates to D (sf) from C (sf). The downgrades follow the $60.1 million of realized trust loss attributed to the liquidation of one loan in the May 2014 remittance period and the erosion of subordination to the bonds.

Highwoods Portfolio (Prospectus ID#2) was previously the largest loan in special servicing. The loan was originally secured by 33 suburban office properties located in Tampa, Florida, and Charlotte, North Carolina. The loan was transferred to special servicing in March 2010 after the borrower stated that it would be unable to acquire new financing prior to the loan’s original scheduled maturity in August 2010. In May 2011, the borrower and lender executed a loan modification, which included a loan restructure with a $100.0 million A-note and a $60.0 million B-note. The maturity date was extended to May 2014 with two additional one-year extensions subject to paydown requirements. The loan was disposed from the trust in May 2014, resulting in a full loss to the B-note. The realized trust loss wiped the remaining balance of Class K, already rated D (sf) by DBRS, as well as the entire balance for Classes G, H and J. In addition, the principle balance of Class F was reduced by 64.2%. In conjunction with the downgrade, DBRS has also removed the Interest in Arrears designation from Classes G, H and J, as they have now defaulted.

Four loans remain in special servicing as of the May 2014 remittance, including Residence Inn Hotel Portfolio 1 (Prospectus ID#6, 3.9% of the current pool balance). The collateral is a portfolio of four limited service hotels located in Fishkill, New York; Orlando, Florida; Fort Worth, Texas; and Tyler, Texas. This loan transferred to special servicing in January 2014 for imminent default given that the borrower’s management agreement with Marriott was expiring in March 2014. According to servicer comments, the borrower and lender have agreed to a consensual foreclosure of the assets. The loan is paid through January 2014 and an updated appraisal has not yet been made available. The loan has a current outstanding principal balance of $46.2 million.

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, the loans in special servicing and the loans on the servicer’s watchlist. The May 2014 Monthly 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 U.S. dollars unless otherwise noted.

The applicable methodology is CMBS Rating Methodology (January 2012) and CMBS North American Surveillance Methodology (November 2012), which can be found on our website under Methodologies.

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