DBRS Downgrades Class of Schooner Trust, Series 2007-8

DBRS Limited (DBRS) has today downgraded the rating of the following class of Commercial Mortgage Pass-Through Certificates, Series 2007-8 (the Certificates) issued by Schooner Trust, Series 2007-8 (the Trust):

-- Class L to D (sf) from C (sf)

DBRS has also changed the trend on both Class F and Class G to Stable from Negative. In addition, the rating for Class XC was discontinued and withdrawn in conjunction with the above-referenced rating action.

The rating downgrade is the result of the most recent realized losses to the Trust that occurred after the Best Western Grand Mountain loan (Prospectus ID#18) was liquidated from the Trust at a loss of $5.3 million with the May 2017 remittance. With this loan’s liquidation, there are no loans remaining in special servicing. The Stable trend assignments reflect the generally favourable refinance outlook for the nine remaining loans in the pool, all of which are performing, with a cumulative outstanding principal balance of $67.4 million as of May 2017. The weighted-average YE2015 debt service coverage ratio (DSCR) and Refi DSCR for the pool are 1.51 times (x) and 1.42x, respectively, and the remaining loans are generally slated to mature by June 2017. In addition, the pool benefits from the full repayment of the Londonderry Mall loan (Prospectus ID#1, approximately 21.0% of the pool at repayment) with the May 2017 remittance.

The Best Western Grand Mountain loan was secured by a limited service hotel property in Grand Cache, Alberta, and was transferred to special servicing in April 2016 for payment in arrears. The collateral hotel and an adjacent non-collateral property previously received purchase bids in April 2016, but ultimately, no sale materialized at that time. According to the March 2017 servicer update, an offer of $5.2 million was accepted for both buildings, with $3.3 million allocated to the collateral hotel. The last reported property valuation, dated July 2016, valued the subject property at $3.2 million, down from $14.6 million at issuance. The loan was subsequently resolved with the May 2017 remittance and the servicer reported net proceeds available for distribution of $1.4 million with the sale, with a loss severity of 79.4%. The loss wiped the remaining balance on Class M and reduced the principal balance on Class L by 27.5%. The realized loss severity was in line with DBRS’s estimates derived with previous surveillance reviews of this transaction.

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

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

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

The principal methodologies are North American CMBS Rating Methodology (January 2017) and CMBS North American Surveillance (December 2016), which can be found on dbrs.com under Methodologies.

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