DBRS Confirms Rating of Merrill Lynch Financial Assets Inc., Series 2002-Canada 7

DBRS Limited (DBRS) has today confirmed the rating on the following class of Commercial Mortgage Pass-Through Certificates, Series 2002-Canada 7 (the Certificates) issued by Merrill Lynch Financial Assets Inc., 2002-Canada 7:

-- Class X at AAA (sf)

The trend for this class is Stable.

The rating confirmation reflects the overall stable performance of the two remaining loans in the pool, as well as the significant collateral reduction of 99.7% since issuance as a result of scheduled loan amortization and successful loan repayment. The two remaining loans are fully amortizing with a combined trust balance of $782,453. The loans exhibit a weighted-average (WA) debt service coverage ratio (DSCR) of 1.55 times (x), based on the most recent year-end reporting available. Additionally, the loans exhibit strong credit metrics with loan-to-value ratios under 10% and low leverage points on a loan per square foot basis. Both loans benefit from full recourse to their respective sponsors.

The largest loan in the pool (Prospectus ID#35, representing 67.1% of the current balance) is secured by an industrial property in Hamilton, Ontario. The loan is scheduled to mature on October 1, 2016, and is occupied by a single tenant with a lease expiring in July 31, 2016, according to the January 2014 rent roll. The YE2013 DSCR was 1.38x, remaining in line with the YE2012 DSCR of 1.42x. In addition, the September 2014 servicer site inspection shows the property to be in above average condition; renovations were completed to the second floor office area and five new roof top HVAC units were installed.

The remaining loan (Prospectus ID#43, representing 32.9% of the current pool balance) is secured by an anchored shopping centre in Hope, British Columbia. The loan is scheduled to mature on June 1, 2016, and is occupied by a single tenant with a lease expiring in May 1, 2016, according to the December 2011 rent roll. While the tenant’s lease expires prior to loan maturity, the tenant has two five-year renewal options available. The YE2012 DSCR was reported at 1.89x, an improvement from the YE2011 DSCR of 1.52x. DBRS was not provided with YE2013 financials for this loan.

For additional detail on the DBRS viewpoint for this transaction, and for details on the remaining loans in the pool, please see the February 2015 Monthly CMBS Surveillance Report for this transaction, which will be published shortly.

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 (January 2015), which can be found on our website under Methodologies.