Contents
Content
Equinox (Eclipse 2006-1) plc
Quarterly Surveillance Report for the
Collection Period January – April 2012
Issue Date: 14th June 2012
Contents
INDEX
Deal Overview
3
Activity since Last Reporting
4
Special Servicing
8
Contact Details
10
Link to Deal Summary Report
10
Deal Overview
Deal Overview
The transaction consists of 13 loans, originated by Barclays Bank PLC, and all domiciled
in the UK, in the sum of £401.36 million. The Weighted Average Cut-Off Date LTV is
63% with ICR 1.76x and DSCR 1.62x.
The loans vary in size from £3.89 million to £83.18 million with a weighted average of
£52.72 million and they similarly vary from single asset single tenant to multi asset/multi
tenant. In total there are 136 properties securing the 13 loans. Three of the loans have
since been prepaid or liquidated.
The loans are diversified in terms of property type and geographical location.
Geographically, the largest concentration is Greater London (38%) and the South East
(19%). The remainders are spread throughout 10 areas of the UK, with the North East
accounting for 11% and no other area accounting for more than 10%.
With regards to property type, office account for 55%, healthcare (nursing home) 20%,
retail 15%, residential 10% and industrial 0.1%.
Five of the loans have B note structures being Royal Mint Court, Redleaf Portfolio,
Macallan Portfolio, Herbrand Street and Holland Park Towers totalling £219.64 million.
Redleaf Portfolio and Herbrand Street have since been liquidated and prepaid
respectively.
In addition the Ashbourne Portfolio A loan, totalling £79.94 million, is a super senior
portion of the senior tranche of the Ashbourne Portfolio Whole Loan that also has two
further senior tranches, a mezzanine tranche and a junior tranche.
Capita acts as both Primary and Special Servicer to the issuer.
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Activity since Last Reporting
Activity since Last Reporting
Royal Mint Court
This loan is secured against four office properties located in London. The loan makes up
29.27% of the securitisation and matures on 16th October 2013. The loan has an A/B
note structure, with the securitised portion representing 83.80% of the outstanding loan
amount.
All debt service payments have been made by the Borrower this quarter and the
Quarterly Property reporting has been received in full.
The office buildings in this portfolio are fully let with a weighted average lease length of
1.91 years. The weighted average lease term of the top 5 tenants is also 1.91 years. The
vacant area at the gym continues to be marketed and is discounted from occupancy
calculations.
The total NOI for this portfolio received this quarter is £2.03 million. The ICR and DSCR
remained stable this quarter, with both projected and annual ICR calculations remaining
above the Cash Trap trigger of 1.25x at 1.48x and 1.47x respectively.
A new valuation report has been commissioned and the updated Market Value of the
property is £32,500,000, taking the LTV of the whole loan to 266%. There are no LTV
covenants but the Servicer is currently in discussions with the Borrower on the future
strategy of the loan.
CSU Portfolio
This loan is secured against two student residences in Southern England. The loan
makes up 7.96% of the securitisation and matures on 16th January 2013.
All debt service payments have been made by the Borrower this quarter and the
Quarterly Property reporting has been received in full.
The portfolio is fully occupied with a weighted average lease length of 17.09 years.
Annual projected NOI is £2,464,000. The projected ICR improved this quarter from 2.21x
to 2.39x as a result of a reduced Net Interest sum reflecting in the calculation due to the
conclusion of the Swap at loan maturity. LTV remained stable quarter to quarter.
This loan is on the Watchlist due to the loan’s pending maturity. Discussions are ongoing
with the Borrower to determine the exit strategy for this loan.
No material changes to be reported this quarter.
4
Activity since Last Reporting
Holland Park Towers
This loan is secured against a single-tenant office building located in West London. The
loan makes up 8.30% of the securitisation and matures on 15th January 2016. The loan
has an A/B note structure, with the securitised portion representing 84.73% of the
outstanding loan amount.
All debt service payment has been made by the Borrower this quarter and the Quarterly
Property reporting has been received in full.
The property is fully let on a fixed FRI lease with 5.14 years to first lease break. The total
NOI for this portfolio received this quarter is £466,000. The ICR, DSCR and LTV have
remained stable from quarter to quarter.
No material changes to be reported this quarter
Avocado Court Portfolio
This loan is secured against a portfolio of five office properties in Northern England and
Scotland. The loan makes up 6.93% of the securitisation and matures on 15th July 2012.
All debt service payments have been made by the Borrower this quarter and the
Quarterly Property reporting has been received in full. The loan amortised £118,000 as
scheduled this quarter.
The portfolio is currently 78.62% occupied with the portfolio weighted average lease term
of 4.59 years. The weighted average lease term of the top 5 tenants is 4.83 years. The
total NOI for this portfolio received this quarter is £418,000.
The Projected ICR has increased from 1.27x to 1.35x due to lower expenses and rent
adjustments. Actual ICR has increased from 1.48x to 1.73x. The Projected ICR test
remains below the cash trap trigger of 1.50x but above the default level of 1.10x.
This loan is on the Watchlist due to the loan’s pending maturity. Discussions are ongoing
with the Borrower to determine the exit strategy for this loan.
No material changes to be reported this quarter.
Portland Place
This loan is secured against a single-tenant office building located in Central London.
The loan makes up 3.69% of the securitisation and matures on 16th January 2014.
All debt service payment has been made by the Borrower this quarter and the Quarterly
Property reporting has been received in full.
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Activity since Last Reporting
The property is fully let with 4.54 years to lease expiry. The total NOI for this portfolio
received this quarter is £260,000 with no non-recoverable costs or rent arrears. The ICR,
DSCR and LTV remained stable this quarter.
No material changes to be reported this quarter.
Fullswing Portfolio
This loan is secured against nine retail properties in Southern England and East Anglia.
The loan makes up 2.90% of the securitisation and matures on 16th October 2012.
All debt service payment has been made by the borrower this quarter and the Quarterly
Property reporting has been received in full.
The portfolio is fully let with a weighted average of 6.07 years to first lease break. The
weighted average lease term to first break across the top five tenants is 6.33 years. The
total NOI for this portfolio received this quarter is £154,000.
The projected and annual ICR calculation and LTV remains stable from quarter to
quarter. Projected DSCR has increased from 1.54x to 1.65x this quarter due to the
conclusion of the amortisation schedule after the July 2012 Interest Payment Date.
This loan is on the Watchlist due to its pending maturity. Discussions are ongoing with
the Borrower to determine the exit strategy for this loan.
No material changes to be reported this quarter.
Ocean Park Portfolio
This loan is secured against four out of town offices near Cardiff. The loan makes up
2.42% of the securitisation and matures on 15th October 2015.
All debt service has been paid by the Borrower this quarter and the Quarterly Property
reporting has been received in full.
The portfolio is fully let with a weighted average of 3.31 years to lease break. The
weighted average lease term of the top five tenants is 3.92 years. The total NOI received
this quarter is £175,143.
The projected ICR and DSCR have decreased from 1.61x to 1.42x due to a lease expiry,
three lease break options and the inception of a new lease at lower rent.
This loan is on the Watchlist due to a cash trap provision of the Final Projected Interest
Cover calculation.
No material changes to be reported this quarter.
6
Activity since Last Reporting
St Mary’s Court
This loan is secured against a single-tenant office building located half a mile south of
Cardiff city centre in Wales. The loan makes up 1.32% of the securitisation and matures
on 15th October 2012.
All debt service payment has been made by the Borrower this quarter and the Quarterly
Property reporting has been received in full.
The property is fully let with two years and 11 months to lease break. The total NOI
received this quarter is just under £81,000 with no rental arrears. The historical ICR and
LTV remained stable this quarter; there has been an increase in the projected annual
DSCR from 1.28x to 1.48x due to the conclusion of the amortisation schedule following
the July 2012 Interest Payment Date.
No material changes to be reported this quarter.
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Special Servicing
Special Servicing
Ashbourne Portfolio A
This loan facility, which is constructed on a floating rate basis and fully hedged by
interest rate swaps, represents the 26.99% participation of the Senior tranche of a loan
originated by the Royal Bank of Scotland. The loan is secured against 90 nursing homes
across the UK. Currently the borrower (with the lenders consent) is working to sell one of
the homes that is vacant. The loan makes up 29.32% of the securitisation and matures
on 13th October 2015.
The borrower has been working in collaboration with the Operators to finalise the
business plan that should eventually guide restructuring of the loan, however, further
home by home analysis is required in order to determine both “catch-up” and regular
operational Capex requirements going into the future.
In addition, active negotiations are in course with the subordinate lenders who hold
positions outside of the securitisation.
Because of a shortfall on Operating Capital during the transfer period the Servicer
agreed to withhold interest and amortisation payments starting in September 2011. The
notes will continue to receive interest from the Liquidity Facility pending such time as a
loan modification has been agreed and arrears of interest and principal are then
subsequently cleared.
Macallan Portfolio
This loan originally comprised 10 properties across the UK and as at Q1 2012 Interest
Payment Date, eight of these had been sold, the then most recent being the Armstrong
House property with a gross sales price of £0.2m being achieved on 24 November 2011.
The loan makes up 7.90% of the securitisation and matures on 15th October 2012. The
loan has an A/B note structure, with the securitised portion representing 80.65% of the
outstanding loan amount.
Funds held on the tranching account representing distributions from the LPA
Receivership were applied towards interest at the April 2012 Interest Payment Date, with
the residual balance of £119,691 being held to provide a contingency for unforeseen
property holding costs. No payments were made to the Junior Lender.
Two properties remain in the portfolio: one of these is a seven storey 65,500 sq ft
building situated in Birmingham currently given over to predominantly office use (vacant)
with retail units to the ground and nightclub use to the basement floors; the other
property comprises office accommodation extending to 14,900 sq ft situated in
Washington, Tyne & Wear. Whilst quarterly rent collected at c.£23,000 was modest and
a reflection of the occupancy, additional quarterly rent includes approximately £50,000 of
advertising revenue that the LPA Receiver has managed to generate through the
erection of temporary signage at the Birmingham property. The LPA Receiver has
confirmed that a balance of £396,000 is under his control representing retained income
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Special Servicing
which has been held as a contingency and is expected to be used in part at the Q2 2012
Interest Payment Date.
The timescale to liquidation of the residual properties has been protracted given issues
including a requirement to obtain a lease extension from the head lessor, change of use
in relation to planning consent for one of the subjects as well as reducing the level of
voids at the second subject prior to re-marketing.
However, the Birmingham property is on the market with competitive interest being
expressed.
The Issuer was advised by the Special Servicer in April 2010 that in the event of all the
properties being liquidated for a combined value of £29m, a resultant loss of £14m was
anticipated allowing for the then uncertain hedge break costs. It is currently anticipated
that the total net sales proceeds will fall short of this figure, and whilst the hedge
termination costs are known having been closed out in April 2011 at a cost of £1.79m, it
is possible that the final liquidation loss will be in excess of £14m. The Special Servicer
will advise the Issuer of developments in this regard with any material updates.
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Contact details
For any questions, please contact: janis.lee@capitaassetservices.co.uk
Janis Lee
Asset Manager
Capita Asset Services
5th Floor, 40 Dukes Place
London
EC3A 7NH
Tel: +44 207 397 4599
Fax: +44 207 204 7501
www.capitaassetservices.ie
Link to the Deal Summary Report
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Disclaimer
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