TEXT - S&P may cut 2 Merrill Lynch Floating Trust series 2006-1

Tue Dec 18, 2012 2:17pm EST

OVERVIEW

     -- We placed our ratings on two classes from Merrill Lynch Floating 
Trust's series 2006-1, a U.S. CMBS transaction, on CreditWatch with negative 
implications.
     -- The CreditWatch placements reflect additional interest shortfalls on 
these classes due to a nonrecoverable determination on the larger of the two 
remaining collateral in the trust. 
 
NEW YORK (Standard & Poor's) Dec. 18, 2012--Standard & Poor's Ratings Services 
today placed its ratings on two classes of commercial mortgage pass-through 
certificates from Merrill Lynch Floating Trust's series 2006-1, a U.S. 
commercial mortgage-backed securities (CMBS) transaction, on CreditWatch with 
negative implications (see list). 

The CreditWatch negative placements reflect interest shortfalls to these 
classes as reflected in the Dec. 17, 2012, trustee remittance report due to a 
nonrecoverable determination made by the master servicer, KeyBank Real Estate 
Capital (KeyBank), on Dec. 12, 2012, on the Royal Holiday Portfolio loan, the 
larger of the two remaining collateral in the trust. According to the December 
2012 trustee remittance report, interest not advanced totaled $143,975 and 
shorted all of the outstanding classes in the trust. 

As of the Dec. 17, 2012, trustee remittance report, the trust consisted of two 
floating-rate interest only loans indexed to one-month LIBOR, both of which 
are currently with the special servicers. The one-month LIBOR rate was 0.208% 
according to the December 2012 trustee remittance report. 

The Royal Holiday Portfolio loan, the larger of the two remaining loans in the 
trust, has a trust balance of $65.0 million (66.3%) and whole-loan balance of 
$103.0 million. The total reported exposure in the trust is $74.8 million. The 
loan is secured by six full-service hotel properties totaling 1,501 rooms in 
various cities in Mexico. The loan was transferred to the special servicer on 
Feb. 11, 2010, due to delinquency. The special servicer, CT Investment 
Management Co. LLC (CT), indicated that the borrower filed for bankruptcy in 
Mexico while the special servicer filed suit on behalf of the lender to seek 
payment under the loan's recourse guaranty. CT expects a lengthy litigation 
process. CT stated to us that updated operating statements for the collateral 
properties are not available. A $131.1 million appraisal value as of Nov. 30, 
2011, was reported by the special servicer. 

The Crowne Plaza Hotel San Antonio loan, the smaller of the two remaining 
loans in the trust, has a trust balance of $33.0 million (33.7%) and a 
whole-loan balance of $59.0 million. The total reported exposure in the trust 
is $33.1 million. The loan is secured by a 410-room full-service hotel in San 
Antonio, Texas. The loan was transferred to the special servicer on Feb. 6, 
2012, for a technical default after failing a performance test as well as 
imminent maturity default. The loan matured on June 11, 2012. The special 
servicer, Berkadia Commercial Mortgage LLC, is currently pursuing various 
workout strategies, including foreclosure. The current reported occupancy at 
the property is 64.0%. KeyBank reported a 3.39x debt service coverage for the 
nine months ended Sept. 30, 2012. The July 12, 2012, appraisal valued the 
property at $43.0 million.

Standard & Poor's will resolve the CreditWatch negative placements as more 
information regarding the potential workouts of the two remaining loans 
becomes available. 

STANDARD & POOR'S 17G-7 DISCLOSURE REPORT

SEC Rule 17g-7 requires an NRSRO, for any report accompanying a credit rating 
relating to an asset-backed security as defined in the Rule, to include a 
description of the representations, warranties and enforcement mechanisms 
available to investors and a description of how they differ from the 
representations, warranties and enforcement mechanisms in issuances of similar 
securities. The Rule applies to in-scope securities initially rated (including 
preliminary ratings) on or after Sept. 26, 2011.

If applicable, the Standard & Poor's 17g-7 Disclosure Reports included in this 
credit rating report are available at 
"RELATED CRITERIA AND RESEARCH
 
     -- Rating U.S. CMBS In The Face Of Interest Shortfalls, Feb. 23, 2006
 
RATINGS PLACED ON CREDITWATCH NEGATIVE

Merrill Lynch Floating Trust
Commercial mortgage pass-through certificates series 2006-1
              Rating
Class     To                    From           
K         BBB+ (sf)/Watch Neg   BBB+ (sf)
L         BBB (sf)/Watch Neg    BBB (sf)
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.