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

DBRS has today confirmed all 14 rated classes of 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 pool’s continued strong overall performance with a current weighted-average debt service coverage ratio (DSCR) of 1.71 times (x) and a weighted-average debt yield of 13.7%, based on the most recent year-end reporting available for the individual loans as of the June 2013 remittance report. There are 47 of the original 72 loans remaining in the pool, with a collateral reduction of 37.2% since issuance. The largest 15 loans represent 66.7% of the current pool balance, as of the June 2013 remittance report. These loans have displayed stable performance with a weighted-average net cash flow (NCF) growth of 29.7% since issuance and a weighted-average DSCR and debt yield of 1.76x and 13.7%, respectively. The pool is geographically diverse, with approximately 79.26% of the pool located within various urban markets. Additionally, the pool has a good mix of collateral by property type. There were no defeased loans in the pool as of the June 2013 remittance report.

There were eight loans on the servicer’s watchlist as of the June 2013 remittance report, representing 11.65 % of the current pool balance, with a weighted-average DSCR of 0.95x and a weighted-average NCF change from issuance of -27.93%, as of the most recent cash flow available. The largest loan on the watchlist is Prospectus ID #16 (3085 Hurontario), which represents 2.70% of the current pool balance. The loan is secured by a mixed-use (office-retail) property in the Toronto suburb of Mississauga, Ontario. The loan was added to the watchlist for a low DSCR of 0.74x at YE2011 due to a 17% increase in operating expenses and a drop in rental and reimbursement revenue. The property had a slight uptick in performance in 2012, with a YE2012 DSCR of 0.92x. Despite the low DSCR, the borrower has kept the loan current.

DBRS has today also confirmed the investment-grade shadow rating on one loan in the transaction, representing 14.15% of the current pool balance.

For a complete discussion of the DBRS viewpoint, including detailed information on the largest loans in the pool, and the loans on the servicer’s watchlist, please see the June 2013 Monthly Surveillance Report for this pool, which will be published shortly.

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

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

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