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 is Stable. The remaining rated class in this transaction is notional.

The rating confirmation reflects the overall stable performance of the remaining two loans in the pool. Since issuance in May 2002, 47 loans out of the original 49 loans have been fully repaid, resulting in a collateral reduction of approximately 99.9%. The transaction is reporting a weighted-average (WA) debt service coverage ratio (DSCR) of 1.54 times (x) and a WA debt yield of 308.9%, based on the most recent available financials. Both remaining loans are fully amortizing and mature in 2016.

The largest loan remaining in the pool is Prospectus ID#35 Privacy Protected Loan, representing 76.5% of the pool balance. This loan has been placed on the watchlist as the servicer has not received any updated financials since December 2013. This loan is secured by a 46,455 square foot (sf) industrial property located in Hamilton, Ontario. The property is 100% occupied by a single tenant with a lease that expires in July 2016, prior to loan maturity in October 2016. DBRS has contacted the servicer regarding the plans of the single tenant. The YE2013 DSCR was 1.38x, remaining in line with the YE2012 DSCR of 1.42x. Despite tenant rollover risk, this loan benefits from having full recourse to its sponsor.

The other loan remaining in the pool is Prospectus ID#43 Privacy Protected Loan, representing 23.5% of the pool balance. This loan is secured by a 21,591 sf anchored retail property located in Hope, British Columbia. The property is 100% occupied by a single tenant with a lease that expires in May 2016, prior to loan maturity in June 2016. There are two five-year extension options available on its lease and DBRS is awaiting a leasing update from the servicer. According to the most recent financials available, the August 2013 annualized DSCR for the loan was 2.04x, which represents an increase from the YE2012 DSCR of 1.89x. According to the November 2015 site inspection, the property is in average condition and there were no capital expenditures or deferred maintenance items noted. This loan also benefits from having full recourse to its sponsor.

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 February 2016 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.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

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

The applicable methodologies are North American CMBS Rating Methodology (June 2015) and CMBS North American Surveillance (December 2015), which can be found on our website under Methodologies.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.