DBRS Confirms 14 Classes of Schooner Trust, Series 2007-7; Releases Surveillance Report

DBRS has today confirmed Classes A though L of the Schooner Trust, Series 2007-7 transaction, all with a Stable trend.

Overall, the pool has exhibited stable performance, with the weighted-average debt-service coverage ratio (WADSCR) increasing to 1.48x (on a whole-loan and P&I basis), from 1.39x, at issuance. Further, the pool’s weighted-average loan-to-value ratio (WALTV) has decreased from 69.4% at issuance to 65.8%, after collectively amortizing 6.2%. The transaction benefits from one loan shadow-rated BBB (low), MTS Building, which represents 10.0% of the current pool balance.

Geographically, the pool is diverse, with properties located across seven provinces. Ontario represents the largest geographic concentration (49.6% of the pool). By property type, office assets lead the transaction at 46.1% of the current pool balance. As of March 2010, the trust balance totals $400,932,708. One of the 72 original loans has paid off.

There is one loan in special servicing, Centre 50, representing 0.90% of the pool. Centre 50 is 90-days past due, as of March 2010. This loan is secured by a 45,000 sf retail centre in Edmonton, and reported a 1.70x DSCR, as of December 2008. Occupancy at the property was last reported at 94%, as of August 2009. The borrower stated that many of the property’s tenants have fallen behind on rent payments, leading to the loan’s delinquent status. However, according to the special servicer, the borrower remitted a partial payment in April 2010, and indicated that the borrower intends to bring the loan current by the end of April 2010.

DBRS added two loans to its HotList: Trans Canada Highway (2.2% of the pool) and 20-24 Melham Court. While 20-24 Melham Court reported a 1.66x DSCR, as of T-12 May 2009, the occupancy rate has decreased to 68.7%, as of January 2010. This loan is secured by three industrial buildings in Scarborough, Ontario. Trans Canada Highway is HotListed because of Poor overall property conditions and environmental issues at the property. This loan is secured by two industrial properties totaling 240,730 sf, located approximately 10 km from the Montreal-Pierre Elliott Trudeau International Airport. At closing, the Phase II environmental report indicated the presence of pyrite in the backfill beneath the concrete slab at both properties, which erodes concrete slab integrity. The smaller of the two properties is currently vacant. This loan has a $1.6 million reserve, established at closing to cover repairs and lost rents. For further information, please refer to the Surveillance Report at www.dbrs.com.

Note:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodologies are CMBS Rating Methodology and CMBS Surveillance, which can be found on our website under Methodologies.

This is a Structured Finance CMBS rating.