DBRS Upgrades Eight Classes of Merrill Lynch Financial Assets Inc., Series 2004-Canada 14

DBRS Limited (DBRS) has today upgraded the ratings of the following classes of Commercial Mortgage Pass-Through Certificates, Series 2004-Canada 14 (the Certificates) issued by Merrill Lynch Financial Assets Inc., 2004-Canada 14:

-- Class E-1 to AAA (sf) from A (high) (sf)
-- Class E-2 to AAA (sf) from A (high) (sf)
-- Class F to AAA (sf) from A (low) (sf)
-- Class G to AAA (sf) from BBB (sf)
-- Class H to AAA (sf) from BBB (low) (sf)
-- Class J to AA (sf) from BB (sf)
-- Class K to A (sf) from B (high) (sf)
-- Class L to BBB (sf) from B (low) (sf)

In addition to the rating actions above, DBRS has also confirmed the ratings of two classes, as follows:

-- Class XC-1 at AAA (sf)
-- Class XC-2 at AAA (sf)

In addition to the above noted ratings actions, DBRS has also discontinued Classes B, C, D-1, and D-2, as these classes were repaid with the March 2015 remittance. DBRS does not rate the $5.1 million first loss piece, Class M. All trends are Stable.

The rating upgrades reflect the overall strong performance of the two remaining loans in the pool, as well as the significant collateral reduction of 95.9% since issuance as a result of scheduled loan amortization and successful loan repayment. The two remaining loans have a combined trust balance of $19,261,658 and exhibit a weighted-average (WA) debt service coverage ratio (DSCR) of 1.88 times (x), based on the most recent year-end reporting available. Additionally, the loans exhibit strong credit metrics with a weighted average debt yield of 16.7% and loan-to-value ratios of approximately 60.0%. Both loans benefit from experienced institutional borrower, Calloway Real Estate Investment Trust (REIT), which provides full recourse for the loans and is rated BBB with a Stable trend by DBRS.

Calloway Corner Brook (Prospectus ID#12, representing 55.5% of the current balance) is secured by a retail power centre in Corner Brook, Newfoundland. The loan is scheduled to mature on June 1, 2015, and was 99.2% occupied according to the March 2014 rent roll. Major tenants at the property include Wal-Mart (59.4% of the net rentable area (NRA), lease expiring in February 2021), Staples (14.0% of the NRA, lease expiring in November 2016), and Sunlife (3.3% of the NRA, lease expiring in August 2017). The YE2013 DSCR was 1.91x, remaining in line with the YE2012 DSCR of 1.92x. In addition, the December 2014 servicer site inspection shows the property to be in above average condition with deferred maintenance limited to asphalt deterioration.

Calloway Beauport (Prospectus ID#14, representing 44.5% of the current balance) is secured by a retail power centre in the Beauport neighbourhood of Québec City. The loan is scheduled to mature on March 1, 2016, and was 100% occupied according to the February 2014 rent roll. Major tenants at the property include Wal-Mart (73.6% of the NRA, lease expiring in November 2021), Mark’s Work Warehouse (5.8% of the NRA, lease expiring in October 2017), and Dollarama Inc. (5.7% of the NRA, lease expiring in April 2020). There is minimum tenant rollover prior to loan maturity and the YE2013 DSCR was 1.85x, an improvement over the YE2012 DSCR of 1.79x. In addition, the June 2014 servicer site inspection shows the property to be in above average condition with minor deferred maintenance noted.

For additional detail on the DBRS viewpoint for this transaction, and for details on the remaining loans in the pool, please see the March 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 and CMBS North American Surveillance, which can be found on our website under Methodologies.