Contents
Content
Equinox (Eclipse 2006-1) plc
Quarterly Surveillance Report for the
Collection Period January - April 2013
Issue Date: 13th June 2013
Contents
INDEX
Deal Overview
3
Activity since Last Reporting
4
Special Servicing
8
Contact Details
10
Link to Deal Summary Report
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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 176% and DSCR 162%.
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. Six 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
Holland Park Towers
This loan is secured against a single-tenant office building located in West London. The
loan makes up 10.07% of the securitisation and matures on 15th January 2016. The loan
has an A/B note structure, with the securitised portion representing 84.45% 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 four years and one month to first lease
break. The total NOI for this portfolio received this quarter is just over £466,000. The ICR
and DSCR have remained stable from quarter to quarter, with variations due to day
count adjustments.
Loan LTV (whole loan/securitised) decreased slightly from 119%/101% to 118%/100%
due to scheduled amortisation. There is no LTV covenant on the loan.
The Servicer is satisfied with the Borrower’s strategy to maturity despite the high LTV
position on the loan. There is currently no cash leakage to shareholders on this loan.
The Servicer will continue to monitor loan performance closely.
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 4.48% 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.
The property is fully let with three years and six months to lease expiry. The total NOI for
this portfolio received this quarter is just below £261,000 with no non-recoverable costs
or rent arrears. The ICR, DSCR and LTV remained stable, with variations due to day
count adjustments and scheduled amortisation.
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
3.01% of the securitisation and matures on 15th October 2015.
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Activity since Last Reporting
All debt service has been paid by the Borrower this quarter and the quarterly property
reporting has been received in full.
The portfolio is let at 83.98%, with a weighted average of four years four months to lease
break. Marketing is ongoing for a vacant unit. The weighted average lease term to first
break of the top five tenants is four years seven months. The total NOI received this
quarter increased from just over £121,000 to just under £135,000 due to the ending of a
rent free period for one of the tenants.
As a result of the ending of the rent free period the projected ICR and DSCR also
increased from 1.55x to 1.57x. LTV remains unchanged at 61.4%.
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.
Fullswing Portfolio
This loan has been fully repaid at the April Interest Payment Date on the 16th April 2013.
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Special Servicing
Special Servicing
Royal Mint Court
This loan is secured against four office properties located in London. The loan makes up
35.14% of the securitisation and matures on 16th October 2013. The loan has an A/B
note structure, with the securitised portion representing 83.46% of the outstanding loan
amount.
The office buildings in this portfolio are fully let with a weighted average lease length of
eleven months. Interest has been expressed for the vacant area at the gym and
discussions are in progress.
The loan transferred to Special Servicing on 20th December 2012 owing to a trigger of
the Material Adverse Change covenant arising from a deterioration in value from the
most recent valuation carried out by Savills (1st April 2012). This represented a Loan
Event of Default.
The Special Servicer has been in active dialogue with the Borrower and has held
discussions with the Freeholder regarding future strategy. The Special Servicer has
appointed Grant Thornton UK LLP in the role of Strategic Advisor to determine the
optimal strategy in relation to maximising recoveries. Furthermore, Savills have been
appointed to provide a detailed building conditions report and dilapidations survey report.
It is expected that the Grant Thornton and Savills findings will be available to the Special
Servicer for consideration by the end of June 2013.
All debt service payments have been made by the Borrower this quarter and the
quarterly property reporting has been received in full. The total NOI for this portfolio
received this quarter is circa £2.09 million. The actual whole loan ICR increased from
1.55x to 1.58x as a result of day count adjustments, whilst the DSCR remained largely
stable at 1.07x.
Ashbourne Portfolio A
The loan is secured against 87 nursing homes (plus a day care centre) across the UK.
Currently the Borrower (with the consent of the Lenders) is working to sell six nonperforming homes (Strathmore, Brundall, Birchwood, Astley Grange, Bryden House,
Balvaird Manor) following the sale of the properties at Drummuir and most recently
Sefton (April 2013). Sale proceeds will be applied through the loan waterfall.
Southern Cross surrendered the leases to the Borrower in 2011 and in consequence two
new Operators were identified and selected to run the homes. Minster operates the
Southern portfolio and Orchard the Northern portfolio (including Scottish and Northern
Irish homes). The business has been rebranded “Larchwood Care.” The Operators are
appointed under a Management Agreement.
The Borrower's updated Home Business plan for the 12 month period Sept 2012/13
envisages turnover of £95.2m, which after staff costs of £60.2m and other costs is
expected to yield EBITDAM of £19.2m.
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Special Servicing
For the half year to 31 March 2013, the following financial highlights have been reported
by the Borrower:
Revenue £47.1m, EBITDAM £8.7m, Occupancy 80.1%
Loan modification is still in progress and documentation is expected to be finalised by
the end of August 2013. Further updates will be communicated when available via Issuer
Notices.
The Special Servicer has instructed an updated valuation which is expected to be
received at the end of June 2013.
Drawings under the Liquidity Facility have been made to keep Noteholders whole during
the period of transitioning the underlying business from Southern Cross and stabilisation
under the Borrower’s direction. In February 2013, the Lenders authorised the Facility
Agent (RBS) to make a payment of £4m through the waterfall. As such, at the April Bond
Payment Date, no drawings were made under the Liquidity Facility and previous
drawings were partially repaid. A further £3.2m is currently held with the Agent pending
distribution through the loan waterfall.
Macallan Portfolio
This loan originally comprised 10 properties across the UK. The final two properties were
sold by the LPA Receiver during April 2013 with a selling price of £450,000 being
achieved in relation to offices situated in Washington, Tyne & Wear, and £2.78m for a
largely empty office and retail premises situated in Birmingham. Funds were applied at
April Interest Payment Date as a principal reduction (£701,690) with the balance being
applied towards current, overdue and default interest, with a reserve to meet interest due
at July Interest Payment Date.
The loan makes up 9.35% of the securitisation and matured on 15th October 2012. The
loan has an A/B note structure, with the securitised portion representing 79.26% of the
outstanding loan amount.
The LPA Receiver is presently dealing with post completion matters including service
charge reconciliations in relation to the Birmingham property. The Special Servicer
anticipates that a loss determination will be made at July Interest Payment Date.
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 1.57% of the securitisation and matured
on 15th October 2012.
As a result of the borrower not repaying the loan at the October Interest Payment Date
this loan was transferred to Special Servicing. A standstill agreement has since been
agreed by the parties until 10th July 2013 to allow the security property to continue to be
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Special Servicing
marketed for sale. At this point there are several interested parties as notified by the
marketing agent and it is anticipated that a formal offer will be forthcoming within the
next four weeks.
In the meantime the single tenant has paid its rent in full and on time.
The Special Servicer will provide further information when it is able to.
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Contact Details
Reporting Queries: Contact janis.lee@capitaassetservices.co.uk
Janis Lee
Asset Manager
Capita Asset Services (London) Limited,
40 Dukes Place
London
EC3A 7NH
Tel: +44 207 397 4599
Fax: +44 207 204 7501
http://www.capitaassetservices.ie
Link to Deal Summary Report:
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Disclaimer
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