Contents
Content
Equinox (Eclipse 2006-1) plc
Quarterly Surveillance Report for the
Collection Period October – January 2013
Issue Date: 15th March 2013
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 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. Five 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.
3
Activity since Last Reporting
Activity since Last Reporting
Royal Mint Court
This loan was transferred to Special Servicing on the 20th December 2012. Notice of
transfer can be found on our company website.
Please refer to the Special Servicing section for further details.
CSU Portfolio
This loan has been fully prepaid at the January 2013 Interest Payment Date.
Holland Park Towers
This loan is secured against a single-tenant office building located in West London. The
loan makes up 9.82% of the securitisation and matures on 15th January 2016. The loan
has an A/B note structure, with the securitised portion representing 84.53% 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 four months 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.
Loan LTV (whole loan/securitised) decreased slightly from 120%/102% to 119%/101%
due to scheduled amortisation. There is no LTV covenant on the loan.
The Servicer met with the Borrower during the quarter and 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 4.37% 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.
4
Activity since Last Reporting
The property is fully let with three years and nine 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.
No material changes to be reported this quarter.
Fullswing Portfolio
This loan is secured against eight retail properties in Southern England and East Anglia.
The loan makes up 2.26% of the securitisation and maturity date has been extended to
16th April 2013.
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 six years five months to first lease
break. The weighted average lease term to first break across the top five tenants is
seven years and one month. The total NOI for this portfolio received this quarter is just
below £119,000.
The actual ICR and DSCR calculations increased this quarter from 1.37x to 4.41x and
1.05x to 2.05x due to the sale of the Oxford property. Sale proceeds of £2,073,416 were
used to pay down the loan (please refer to the RIS notification published on 17th January
2013 on the Capita Asset Services website). The LTV has decreased from 67.61% to
58.95% due to the Oxford property sale.
Pursuant to the provisions of the loan extension, the requirement for the Borrower to
provide satisfactory evidence of a secure committed facility in an amount sufficient to
repay all amounts outstanding under the Loan by 27th February 2013 has been met.
Ocean Park Portfolio
This loan is secured against four out of town offices near Cardiff. The loan makes up
2.91% 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 let at 83.98%, with a weighted average of four years seven months to
lease break, down from 88% last quarter. This reduction is mainly due to the vacation of
one tenant at lease break. Marketing is ongoing for the other vacant unit. The weighted
average lease term to first break of the top five tenants is four years 10 months. The total
NOI received this quarter is just over £121,000.
The projected ICR and DSCR have increased from 1.45x to 1.55x. This increase
resulted from a new tenant taking occupancy in the property and its rental income being
included in the projected forecast. LTV remains unchanged at 61.4%.
5
Activity since Last Reporting
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
Special Servicing
Special Servicing
Royal Mint Court
This loan is secured against four office properties located in London. The loan makes up
34.35% 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
one year four months. The vacant area at the gym continues to be marketed.
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 regarding the future
strategy of the loan. Furthermore, the Special Servicer has held initial discussions with
the Freeholder and has instructed Grant Thornton UK LLP in the role of Strategic
Advisor to determine the optimal strategy in relation to maximising recoveries. It is
expected that Grant Thornton will make their observations known to the Special Servicer
for consideration by 30th April 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 just below £2.12 million. The actual whole loan ICR and DSCR
remained stable at 1.55x/1.09x.
Ashbourne Portfolio A
This loan facility, which is constructed on a floating rate basis and fully hedged by
interest rate swaps, represents 26.99% participation of the senior tranche of a loan
originated by the Royal Bank of Scotland. The loan makes up approximately 35.25% of
the securitisation and matures on 13th October 2015.
The loan is secured against 88 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 following the sale of the property at Drummuir. 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.
7
Special Servicing
The Borrower's Home Business plan for the 12 month period Sept 2012/13 envisages
turnover of £99.56m, which after staff costs of £61.23m and other costs is expected to
yield EBITDA of £20.43m.
Operator costs are planned at £3.55m and CAPEX of £6.7m to provide £10.2m surplus
for the 12 month period to be applied in relation to the Priority A hedge and Priority A
debt (i.e. securitised loans) in seniority pending clearance of arrears.
For the three months to 31 December 2012, the following financial highlights have been
reported by the borrower:
Revenue £23.8m (£511k adverse variance); EBITDAM £4.24m (£420k adverse
variance); occupancy is stable at approximately 80.8%, albeit 1% below budget.
Loan modification is still in progress. Further updates will be communicated when
available via Issuer Notices.
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: a further £1.1m is held with the Agent pending distribution.
Macallan Portfolio
This loan originally comprised 10 properties across the UK and as at Q4 2011 Interest
Payment Date, eight of these had been sold, the then most recent being the Armstrong
House property with a gross sales price of £0.2million being achieved on 24th November
2011. The loan makes up 9.50% of the securitisation and matured on 15th October
2012. The loan has an A/B note structure, with the securitised portion representing
80.65% of the outstanding loan amount.
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.
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, following marketing an offer has been accepted in relation to the Birmingham
property and the LPA Receiver has confirmed that exchange of contracts took place on
25th October 2012 with the prospective purchaser paying a cash deposit equating to 5%
of the total consideration.
8
Special Servicing
In addition, the principal behind the acquiring entity deposited a personal guarantee in
respect of an additional payment of a further 2.8% (total 7.8%) of the agreed purchase
price and this was received by LPA Receiver in December 2012. A contribution from the
purchaser has been agreed in relation to the seller’s legal costs.
The completion long-stop date is set for 31st March 2013, but may occur earlier at the
purchaser’s option.
The final remaining and much smaller property (offices totalling 14,900 square feet
situated in Washington Tyne & Wear) was entered into a London auction sale on 14
February and sold at a price of £450,000 with a 10% deposit paid.
Completion is set for 28th March 2013.
Prospects exist for final liquidation of the portfolio and on completion investors will
advised by an Issuer update.
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 1.54% of the securitisation and matures
on 15th October 2012.
As a result of the borrower not repaying the loan at the July Interest Payment Date this
loan was transferred to special servicing. A standstill agreement has since been agreed
by the parties until 15th April 2013 to allow the security property to continue to be
marketed for sale, at this point there has been some interest as notified by the marketing
agent but no firm offers.
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.
9
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:
10
Disclaimer
Unless otherwise noted, this document has been prepared by Capita Asset Services (London) Limited or one of its
affiliated companies (collectively referred to as “CAS”), acting as Primary Servicer and/or Special Servicer (collectively
referred to as “the Servicer”) in relation to Equinox (Eclipse 2006-1) plc.
With respect to documents that have been issued as a RIS Notice, such documents have been issued by the issuer of the
notes and have not necessarily been prepared by the Servicer. Deal Summary, CMSA and Asset Surveillance reports will
not generally be issued as RIS Notices.
This document is provided for information purposes to holders of the relevant notes from time to time and prospective
investors who may lawfully receive, and have read, the prospectus for such notes. The information contained herein must
be read in conjunction with, and is qualified by, such prospectus. This document is not directed to, or intended for
distribution to or use by, any person or entity that is a citizen or resident or located in any locality, country, state or other
jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would
require any registration or licensing within such jurisdiction.
The document does not constitute any form of commitment, advice or recommendation on the part of CAS or its officers,
affiliates, advisors, agents or representatives in relation to any transaction. Nothing in any of the documents on this site
constitutes any promotion in respect of any invitation, endorsement or offer to invest in any securities in any jurisdiction.
The document is not intended to represent an offer of securities for sale in the United States or to U.S. persons (within the
meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act").
CAS does not offer or purports to offer investment, tax, regulatory, accounting or legal advice and these documents
should not and cannot be relied upon as such.
Neither CAS, nor any officer or employee thereof of The Capita Group plc or any affiliate accepts any liability whatsoever
for any direct or consequential losses arising from any use of information contained herein, including, without limitation,
the reliance on any information, data or model, or the use of the documents in the preparation of your financial books and
records. You must rely solely on your own examinations of the prospectus for the relevant notes, and consult your own
investment, tax, regulatory, accounting or legal advisors prior to making any investment decisions or taking any other
action relating to the information contained on this document.
Certain information contained in this document is derived from information provided to or obtained by the Servicer from
third parties, including the relevant cash managers. CAS has not independently verified any of such information.
Accordingly, CAS does not guarantee or provide any warranties as to their accuracy or completeness and they should not
be relied upon as such.
CAS does not purport that the information contained in this document is all-inclusive or contains all of the information that
an investor may require to make a full analysis of the relevant notes. Each recipient of this document must make its own
independent investigation and analysis of the information and the notes and its own determination of the suitability of any
investment in the relevant notes, with particular reference to its own investment objectives and experience and any other
factors which may be relevant to it in connection with such investment and on such other information and advice from its
own legal, accounting and tax advisers as it deems relevant and without reliance on the document.
Any modelling or back-testing included is not an indication as to future performance of the applicable notes. No
representation is made by CAS as to the reasonableness of the assumptions made within or the accuracy or
completeness of any modelling or back-testing contained herein.
Capita Asset Services (London) Limited is registered in England with Company Registration No. 05309552.
The document or information contained herein (whether in whole or in part) may not be reproduced, distributed or
transmitted to any other person or incorporated into another document or other material without the prior written
permission of CAS.
11