DBRS Downgrades Four Classes of ML-CFC Commercial Mortgage Trust, Series 2006-1

DBRS has today downgraded four classes of the ML-CFC Commercial Mortgage Trust, Series 2006-1 as follows:

Class L from C (sf) to D (sf)
Class M from C (sf) to D (sf)
Class N from C (sf) to D (sf)
Class P from C (sf) to D (sf)

These rating actions reflect the most recent losses to the trust, resulting from the liquidation of two loans in April 2012. As of the April 2012 remittance report, realized losses for those two loans combined for $22.10 million; to date 12 loans have been liquidated at a cumulative loss of $46.36 million. In addition, DBRS has removed the Interest in Arrears designation from all four classes.

Prospectus ID #18 (Colonial Mall Glynn Place) was secured by approximately 300,000 sf of a regional shopping mall anchored by Sears, Belk and JC Penney located in the tertiary community of Brunswick, Georgia, located in the southeastern corner of the state, approximately 70 miles north of Jacksonville, Florida. At issuance, the collateral square footage included anchor Steve & Barry’s (30.7% of the collateral NRA), who closed in 2009 after filing for bankruptcy. After the closure, the collateral occupancy fell precipitously and has hovered near 50% since 2010. The loan transferred to the special servicer in March 2010. At issuance, the property was valued at $32.00 million and the most recent appraisal, from October 2011, valued the asset at $5.65 million. According to the April 2012 remittance report, the property was sold for approximately $6.00 million, resulting in a loss of $15.29 million and a loss severity of 77.10%.

The second loan liquidated in April 2012 is Prospectus ID #43, Cranberry Plaza. That loan was secured by a 204,000-sf flex industrial property located in Parsippany, New Jersey, approximately 20 miles northwest of Newark. The property lost its largest tenant in 2009 prior to lease expiry and occupancy hovered near 60% for the two years following. In January 2011, the loan was transferred to the special servicer after the borrower requested relief. At issuance, the property was valued at $15.50 million and the April 2011 appraisal obtained by the servicer valued the property at $6.20 million. According to the April 2012 remittance report, the property was sold for approximately $6.10 million, resulting in a realized loss of $6.81 million and a loss severity of 57.92%.

For additional detail on the DBRS viewpoint for this transaction, and for details on the largest loans in the pool, the loans in special servicing and the loans on the servicer’s watchlist, please see the April 2012 Monthly Surveillance Report for this transaction, which will publish shortly.

Notes:
All figures are in U.S. dollars unless otherwise noted.

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