DBRS Confirms All Classes of Schooner Trust, Series 2006-5

DBRS has today confirmed all ratings of Schooner Trust, Series 2006-5 as follows:

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

The trend on all classes is Stable.

The pool continues to perform as expected. The weighted-average debt service coverage ratio (DSCR) for the pool is 1.6 times (x), compared with 1.5x at issuance, and the weighted-average debt yield is 13.9%, compared with 10.6% at issuance. As of the June 2013 remittance, the pool has experienced a 25.3% collateral reduction, with 76 of the original 91 loans still outstanding.

There are no delinquent or specially serviced loans; however, nine loans are currently flagged for the servicer’s watchlist. DBRS only considers some of these loans to be of immediate concern and continues to monitor the watchlist on a monthly basis.

DBRS has removed the shadow rating from McArthur Plaza (Prospectus ID #45), which represents 0.84% of the current pool balance. The loan was shadow-rated investment grade due to the credit quality of the largest tenant, Sobeys Inc. (Sobeys), which is currently rated BBB by DBRS. The removal of the shadow rating is a result of uncertainty surrounding Sobeys’ rating. DBRS placed Sobeys Under Review with Negative Implications on June 12, 2013, following a proposed merger with Canada Safeway Limited. While the shadow rating has been removed, DBRS still considers the loan to be strong, based on its financial performance. As such, the shadow rating removal is considered to be credit neutral to the overall transaction. For more information on the recent rating action on Sobeys, please see the June 12, 2013, press release by clicking on the link under Related Research on the DBRS website, or under Associated Documents below.

DBRS maintains investment-grade shadow ratings on five loans in the transaction, which collectively represent 9.3% of the current pool balance. DBRS has today confirmed that the performance of these loans remains consistent with investment-grade loan characteristics.

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 largest loans in the pool and loans on the servicer’s watchlist. The June 2013 Monthly CMBS 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 (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.