DBRS Places MLML Inc. Series 1999-Canada 2 Class F UR-Neg

Dominion Bond Rating Service (“DBRS”) has today placed the ratings of Class F of Merrill Lynch Mortgage Loans Inc., Commercial Mortgage Pass-Through Certificates, Series 1999-Canada 2 (“CAN 2”) “Under Review with Negative Implications”. The ratings of Classes A-1, A-2, X-1, X-2, and B are confirmed at AAA; Class C is confirmed at AA; Class D is confirmed at A; and Class E is confirmed at BB (high). The trends for these classes are Stable.

The decision to place Class F “Under Review with Negative Implications” has been brought about by the continued decline in performance and the transfer of ownership without lender consent of the fourth largest loan in the pool, Portage Place. The loan represents 5.8% of the transaction balance. Since 2002, the performance of the loan has declined and the borrower’s 2004 audited financials, received by DBRS in July 2005, indicate a debt service coverage ratio using net operating income to be below 1.0 times (x). While the loan remains current, a substantial decline in value since issuance can be implied as a result of the depressed operating income. Occupancy at the property remains high, at around 91%. The property, an enclosed shopping centre, is located in downtown Winnipeg and is connected to the newly built MTS Centre via an enclosed skywalk.

While there is recourse to the borrower for 50% of the loan amount, DBRS notes the ability to collect on the recourse guarantee is uncertain. The original borrower, Consolidated Properties Ltd. (now Canadian Aspen Properties Ltd.), has not provided sufficient information to assess the strength of the guarantee. In addition, the property was sold in April 2005 without lender consent, and the new borrower has not provided sufficient information regarding its credit strength for the servicers to grant such consent. The loan is a pari passu participation interest that has been split into two pieces – 55.9% and 44.1%. The 44.1% participation is in the CAN 2 trust and the 55.9% is in the Merrill Lynch Mortgage Loans Inc. Series 1998-Canada 1 (“CAN 1)” trust. GMAC Commercial Mortgage Corporation, as Master Servicer for the CAN 2 trust, and GEMSA Loan Services L.P., as Master Servicer for the CAN 1 trust, are working together with the primary servicer to obtain the necessary documents from the borrower for the consent.

DBRS expects to receive more information regarding the guarantors and the new borrower’s proposed plan to improve performance at the property. As it currently stands, the current performance of the property without ample reliance upon a guarantee may result in a downgrade of Class F.

The performance update of the remaining loans in the CAN 2 transaction, including Portage Place, will be released shortly.