DBRS Confirms 14 Classes of Schooner Trust, Series 2007-7

DBRS has today confirmed all 14 rated classes of the Schooner Trust, Series 2007-7 (the Trust) transaction. The ratings were confirmed as follows:

Class A-1 at AAA (sf)
Class A-2 at AAA (sf)
Class B at AA (sf)
Class C at A (sf)
Class D at BBB (sf)
Class E at BBB (low) (sf)
Class F at BB (high) (sf)
Class G at BB (sf)
Class H at BB (low) (sf)
Class J at B (high) (sf)
Class K at B (sf)
Class L at B (low) (sf)
Class XP at AAA (sf)
Class XC at AAA (sf)

All classes were confirmed with Stable trends.

These rating actions reflect the strong performance of the pool overall, with a weighted-average debt service coverage ratio (DSCR) of 1.60 times (x) and a weighted-average debt yield of 12.7% for the pool, based on the most recent year-end reporting available for the individual loans as of the May 2012 remittance report. There are 55 of the original 72 loans remaining in the pool, with a collateral reduction of 25.0% since issuance. One of the largest loans in the pool, Prospectus ID #10 (TransCanada Highway), was repaid in full with the May 2012 remittance. There is one defeased loan in the pool, representing 0.7% of the overall pool balance.

There has been one loan liquidated since issuance, Prospectus ID #72 (2766 Danforth Avenue). The loan was disposed in July 2011, with a loss of $6,223 incurred to the Trust. The loss was attributed to fees incurred by the servicer that were deemed non-recoverable and was contained to the unrated Class M certificates.

One loan, representing 12.1% of the pool, is shadow-rated investment grade by DBRS, based on the rating of the single tenant at the collateral property.

There were two small loans, representing a combined 1.04% of the pool balance as of the May 2012 remittance report, originally scheduled to mature in February 2012 and extended by the servicer to May 2012.

There are twelve loans on the servicer’s watchlist, representing 11.0% of the overall pool balance. The largest of these loans is Prospectus ID #13 (Les Cours de Lachenaie), representing 2.47% of the pool. The loan is secured by a retail property outside of Montréal and was previously on the watchlist for a low DSCR of 1.08x at YE2009, resulting from occupancy fluctuations at the property during that year. The property’s performance improved in 2010, with a YE2010 DSCR of 1.13x and an occupancy rate of 91%. The May 2012 rent roll for the property shows that occupancy has improved to 97%. The loan was originally scheduled to mature in January 2012, and an extension to June 2012 was granted to accommodate the borrower’s refinance schedule.

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

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

The applicable methodologies are CMBS Rating Methodology (January 2012) and CMBS North American Surveillance (May 2011), which can be found on our website under Methodologies.