DBRS Confirms All Classes of Schooner Trust 2006-5

DBRS has today confirmed all classes of Schooner Trust Commercial Mortgage Pass-Through Certificates, Series 2006-5, including the notional Classes XP and XC. All trends are Stable.

Three loans in this transaction that were originally scheduled to mature in January 2011 and February 2011 were granted short term extensions of their maturity date. The average debt yield for these three loans is approximately 13% and DBRS considers loans with an exit debt yield in excess of 11% good candidates for refinance.

Eight loans, representing 10.87% of the current pool balance, benefit from investment-grade shadow ratings, including two top ten loans, Springdale Square (Prospectus ID#6, 3.88% of the current pool balance) and Greenwood Beach Retail Centre (Prospectus ID#8, 2.96% of the current pool balance), which are shadow-rated BBB (low) and BBB, respectively. The shadow-ratings are based on the credit quality of the tenants and the longevity of their respective leases. DBRS has today confirmed the shadow-ratings for these eight loans.

Four loans are currently on the servicer’s watchlist, representing 1.86% of the transaction. The loans were placed on the servicer’s watchlist due to a decline in occupancy.

2695 Dollard Avenue (Prospectus ID#38, 0.72% of the current pool balance) is secured by a 70,853 sf Industrial property located in LaSalle, Quebéc. Although the property is currently suffering from occupancy issues, the loan remains current. The loan per square foot is reasonable at $42 and will amortize down to $36 per square foot at maturity. Additionally, the property should benefit from its location, less than 10 km from the Montréal-Pierre Elliott Trudeau International Airport.

675 Yonge Street (Prospectus ID#56, 0.50% of the current pool balance) is secured by a 23,482 sf Anchored Retail property in Toronto. Despite the recent decline in occupancy, the leverage point, on a per square foot basis, is reasonable at $89. The loan remains current and matures in December 2015.

390 Commissioners Road West (Prospectus ID#86, 0.23% of the current pool balance) is secured by an 11,574 sf office property located in London, Ontario. Although this property is currently experiencing a decline in occupancy, the loan benefits from a 25-year amortization schedule. Further, this loan remains current and does not mature until February 2016.

The four servicer watchlisted loans benefit from recourse to the borrower. For more information regarding these loans, please visit the Monthly CMBS Surveillance Report. DBRS will continue to monitor these loans.

The transaction exhibits stable performance overall. The WADSCR for the 15 largest loans in the pool is 1.61x, and the WADSCR for all trust loans is 1.59x. The transaction has experienced 14.6% collateral reduction since issuance, and defeasance collateral represents 5.2% of the current pool balance.

The transaction is well diversified by property type with office and retail properties representing 20.9% and 27.2% of the current pool balance, respectively. The pool is heavily concentrated in the province of Ontario (60.9% of the current pool balance); however, the underlying assets in that province represent a healthy variety of property types and are performing with a WADSCR of 1.55x.

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

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