DBRS Confirms Ratings of Merrill Lynch Financial Assets Inc., Series 2006-Canada 18

DBRS Limited (DBRS) has today confirmed all classes of Merrill Lynch Financial Assets Inc., Series 2006-Canada 18 as follows:

-- Class A-2 at AAA (sf)
-- Class A-3 at AAA (sf)
-- Class B at AAA (sf)
-- Class C at AA (sf)
-- Class D at BBB (sf)
-- Class E at BBB (low) (sf)
-- Class F at BB (high) (sf)
-- Class G at BB (sf)
-- Class H at BB (low) (sf)
-- Class J at B (high) (sf)
-- Class K at B (sf)
-- Class L at B (low) (sf)
-- Class XC at AAA (sf)

All trends are Stable.

At issuance, the collateral consisted of 83 loans secured by 158 multifamily and commercial properties. As of the March 2015 remittance, the pool has experienced a collateral reduction of 42.4%, and 57 loans remain outstanding in the pool. All outstanding loans will mature by November 2017, with 53 loans, representing 94.2% of the current pool balance, maturing within the next 12 months. This transaction benefits from full or partial recourse guarantees provided on 32 loans, representing 55.6% of the pool, including eight in the Top 15. In addition, five loans are fully defeased, representing 7.6% of the current pool balance. Two of these defeased loans, Bolton Country Shopping Centre and Brant Plains Plaza (3.3% of the current pool balance combined), were previously shadow-rated investment grade by DBRS and were fully defeased at the beginning of 2015.

As of the March 2015 remittance, there are 11 loans on the servicer’s watchlist, representing 20.9% of the current pool balance. Two of these loans are in the Top 15, including the largest loan in the pool. TransGlobe Pooled Senior Loan (Prospectus ID#1, 13.0% of the current pool balance) is a multifamily portfolio consisting of 25 properties located in Ontario and Nova Scotia. The loan was placed on the watchlist as a result of a servicer site inspection, which rated one of the portfolio properties in Poor condition. Overall occupancy for the portfolio was reported to be 95.8% as of August 2014, and the whole loan debt service coverage ratio (DSCR) was 1.07 times (x) at YE2013. The second loan, 1500 Royal York (Prospectus ID#28, 2.1% of the current pool balance), is on the watchlist for property deficiencies related to a number of deferred maintenance items that have been present since July 2012 and have not been repaired. The property continues to perform with a below-threshold DSCR, which was reported to be 0.76x at YE2013 as a result of increasing operating expenses. According to a rent roll dated July 2014, the property is 88.8% occupied, up from YE2012. Six of the 11 loans on the servicer’s watchlist have full or partial recourse to their respective sponsors, including TransGlobe Pooled Senior Loan.

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