DBRS Adds Interest in Arrears to Ten Classes of Real Estate Asset Liquidity Trust, Series 2007-1

DBRS has today added the Interest in Arrears designation to Class D-1 through Class L of Real Estate Asset Liquidity Trust, Series 2007-1. Classes D-1, D-2, E-1 and E-2 are currently rated investment grade. The interest shortfalls were a result of special servicing fees collected following the payoff of one loan that was previously in special servicing, Impero Properties (Prospectus ID#13).

Impero Properties was secured by an office complex in Edmonton, Alberta, and had an outstanding principal balance of $8.3 million at the time of disposition. The property was discovered to carry $3.0 million in unapproved subordinate debt. Reportedly, the second mortgage was to have matured in November 2009 and the borrower was not able to pay the balance. The loan was transferred to special servicing in February 2011. According to the special servicer, the asset had generated some interest from potential buyers. A July 2011 appraisal valued the property at $19.5 million, well in excess of the loan’s outstanding principal balance, including the second mortgage.

This loan was paid off with the May 2013 remittance, with no loss incurred to the trust. Special servicing fees and trust fund expenses related with this loan were included in the May 2013 remittance and were paid from interest, creating interest shortfalls to the capital stack through Class D-1.

DBRS continues to monitor this transaction in its Monthly CMBS Surveillance Report, with additional information on the DBRS viewpoint for this transaction, including details on the remaining loans in the pool. The May 2013 Monthly Surveillance Report for this transaction will be published shortly. If you are interested in receiving this report, contact us at info@dbrs.com.

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

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

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