DBRS Upgrades One, Downgrades One and Confirms Two Classes of Merrill Lynch Mortgage Trust 2005-CIP1

DBRS Limited (DBRS) has today upgraded the rating of the following class of Commercial Mortgage Pass-Through Certificates, Series 2005-CIP1 (the Certificates) issued by Merrill Lynch Mortgage Trust, Series 2005-CIP1 (MLMT 2005-CIP1 or the Trust):

-- Class C to AA (sf) from BB (low) (sf)

In addition, DBRS has downgraded the rating of one class as follows:

-- Class E to D (sf) from C (sf)

Finally, DBRS has confirmed the following ratings of the remaining classes in the transaction:

-- Class D at C (sf)
-- Class XC at AAA (sf)

All trends are Stable with the exception of Classes D and E, which have ratings that do not carry trends. In addition to the rating actions above, DBRS has removed the Interest in Arrears designation on Classes D and E.

The rating upgrade to Class C reflects the increased credit support to the bond as a result of loan amortization, principal proceeds recovered from liquidated loans and successful loan repayment. In the last 12 months, five loans have left the Trust, contributing to a principal paydown of $46.2 million. Two of these loans, the Residence Inn Hotel Portfolio loan (Prospectus ID#6) and Desert Professional Plaza loan (Prospectus ID#81) were liquidated from the Trust with a combined realized loss of $31.8 million with the January 2017 remittance, prompting the rating downgrade on Class E. The loans transferred to special servicing for monetary or maturity default in January 2014 and July 2015, respectively. The servicer reported proceeds of $9.0 million with the disposition of the properties and the Trust loss wiped the remaining balance on Class F and reduced the principal balance on Class E by 77.4%.

As of the January 2017 remittance report, the pool has experienced collateral reduction of 97.7% since issuance with six of the original 135 loans still outstanding. Four loans, representing 61.8% of the current pool balance, are scheduled to mature by September 2020 with a debt service coverage ratio (DSCR) and exit debt yield of 2.12 times (x) and 15.7%, respectively, according to the most recent year-end reporting available. There are currently two loans in special servicing, representing 38.2% of the current pool balance, which are both non-performing matured balloon loans. Both of the loans in special servicing have been delinquent for more than 12 months. DBRS modeled losses for these loans based on recent property values, which have declined since issuance. Since issuance, 28 loans have been liquidated from the Trust at a combined realized loss of $165.8 million.

DBRS has provided updated loan-level commentary and analysis for the remaining loans in pool, which can be found in the DBRS CMBS IReports platform. To view these and future loan-level updates provided as part of DBRS’s ongoing surveillance for this transaction, please log into DBRS CMBS IReports at www.ireports.dbrs.com.

Notes:
All figures are in U.S. 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 (January 2017) and CMBS North American Surveillance (December 2016), which can be found on our website under Methodologies.