DBRS Confirms Rating for Selkirk No. 1 - Limited

DBRS, Inc. (DBRS) has today confirmed the rating for the following class of Selkirk No. 1 Trust Commercial Pass-Through Certificate (the Certificate) issued by Selkirk No. 1 - Limited. The trend is Stable.

-- Class A at AAA (sf)

The underlying collateral consists of 53 seasoned, fixed-rate loans secured by 65 commercial and multifamily properties comprising a total transaction balance of $852.7 million. Since the deal closed in December 2013, two loans have prepaid from the pool. In addition to these prepayments, scheduled amortization on the remaining loans has contributed to a total collateral reduction of 7.4% as of the November 2014 remittance.

There are currently two loans on the servicer’s watchlist, representing 6.1% of the current pool balance. The smaller of the two loans has been flagged for the lease expiration of a large tenant. The upcoming lease expiration was known at the time of securitization, and DBRS was able to confirm that the lease in question had been renewed. The largest loan on the watchlist is the second-largest loan in the pool, Mission Towers II (Prospectus ID#2, 6.0% of the current pool balance). This loan is secured by a Class A office property located in Santa Clara, California. The loan has also been flagged for the upcoming lease expiration of a major tenant. WebEx leases 57.3% of the net rentable area through an agreement scheduled to expire on December 31, 2014. The space is being marketed on CoStar as available for rent beginning January 1, 2015. In addition to WebEx vacating, another tenant occupying the fifth floor has executed a termination option. Santa Clara is situated in the heart of Silicon Valley, a relatively liquid market for office space within the state of California. The submarket vacancy for Class A office space was 12.3% as of Q3 2014, according to CoStar. The sponsor is an experienced owner and operator of commercial real estate and owns the neighboring building, Mission Towers I. According to the servicer, several existing tenants in the Mission Towers I and Mission Towers II building have expressed interest in expanding into the WebEx space, and half of the fifth floor has already been re-leased. In addition, there is a tenant improvement/leasing commission reserve with a current balance of $6.5 million to further aid in releasing space at the property.

DBRS continues to monitor this deal on a monthly basis. For more information on this rating action, please contact us info@dbrs.com.

Notes:
All figures are in U.S. 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 Surveillance Methodology, which can be found on our website under Methodologies.