DBRS Changes Trend of Two Classes for Taurus CMBS (Pan-Europe) 2007-1 Limited

DBRS has today changed the trend of the Commercial Mortgage Backed Floating Rate Notes, Classes E and F issued by Taurus CMBS (Pan-Europe) 2007-1 Limited to Negative from Stable.

The decision to change the trend of Classes E and F to Negative is a result of major tenant default in one loan, WPC #1 G&S (1.1% of the pool). Collateral for the loan consists of two industrial/manufacturing properties, with a total of 17,593 sqm (189,381 sf), located in Germany. The sole tenant at the properties, Gortz & Schiele (G&S), had previously requested a short-term reduction in its rental payment. It has not paid its rent since September 2008 and has reportedly filed an application with the court to open insolvency proceedings. G&S is a manufacturer of high-value components for the auto industry and major customers include BMW, Mercedes, Volkswagen and General Motors. While the properties have a significant amount of heavy equipment located at them, they could be converted for use by another tenant. Based on the appraiser’s initial evaluation, passing rent at the subject properties was approximately 26% above market rent. At issuance, DBRS marked down the tenant’s rent to market levels and the ICR on both the A-note and the whole loan is greater than 150%, based on this lower passing rent. The current A-note debt yield, based on the market rent figure, is quite high at 14.2%.

As a result of the major tenant default, the borrower was required by the loan terms to deposit six months of interest payments (EUR191,474). This borrower has fulfilled this requirement and continues to make P&I payments. The borrower’s parent company, W.P. Carey & Co. LLC, specializes in single-tenant industrial facilities and will likely continue making payments so long as it sees equity remaining in its investment.

Note:
All figures are in euros unless otherwise noted.

The applicable methodology is CMBS Rating Methodology which can be found on our website under Methodologies.

This is a Structured Finance rating.