DBRS Downgrades Classes H and J of ML-CFC Commercial Mortgage Trust, Series 2006-1

DBRS has today downgraded the Class H and Class J certificates of the ML-CFC Commercial Mortgage Trust, Series 2006-1 (the Trust) from C (sf) to D (sf).

These rating actions reflect the most recent losses to the Trust, resulting from the liquidation of four loans in September 2012. As of the September 2012 remittance report, realized losses for those two loans combined totaled $19.36 million and a weighted-average loss severity of 46.72%. To date, 18 loans have been liquidated out of the trust at a cumulative loss of $73.44 million.

The largest loan liquidated with the September 2012 remittance was Prospectus ID #12 (East Thunderbird Square), which had an outstanding principal balance of $27.18 million at liquidation. The loan was secured by a 162,000 sf anchored retail center in Scottsdale, Arizona. The loan transferred to the special servicer in April 2011 when the borrower requested relief after losing a major tenant in late 2010. The special servicer cashed a $5.6 million letter of credit to pay down the loan balance, bringing the trust’s exposure to approximately $190 psf. The May 2012 appraisal valued the property at $21.0 million, down significantly from $48.26 million at issuance. In August 2012, the special servicer negotiated a sale of the asset through the receiver, and the transaction resulted in gross proceeds of $21.10 million. The trust incurred a loss of $10.17 million on the loan (loss severity of 37.43% on the outstanding loan balance at liquidation) as of the September 2012 remittance report.
As of the September 2012 remittance report, there are eight loans remaining in special servicing, with an aggregate principal balance of $97.20 million, representing 7.25% of the outstanding pool balance.

Two large performing loans were repaid in full at maturity with the September 2012 remittance: Prospectus ID #1 (Galileo Retail Portfolio), which had an outstanding principal balance of $173.80 million at repayment, and Prospectus ID #9 (Sprint Data Center), which had an outstanding principal balance of $52.80 million at repayment. With the repayment of these loans, the Class A-3, Class A-3FL and Class A-3B certificates were repaid in full.

For additional details 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 September 2012 Monthly Surveillance Report for this transaction, which will be published shortly.

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

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

This rating is endorsed by DBRS Ratings Limited for use in the European Union.