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Announcement:

Moody's Affirms 23 CMBS Classes of WBCMT 2006-C23

12 Apr 2011

Approximately $3.73 Billion of Structured Securities Affected

New York, April 12, 2011 -- Moody's Investors Service (Moody's) affirmed the ratings of 23 classes of Wachovia Bank Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 2006-C23 as follows:

Cl. A-4, Affirmed at Aaa (sf); previously on Mar 13, 2006 Definitive Rating Assigned Aaa (sf)

Cl. A-5, Affirmed at Aaa (sf); previously on Mar 13, 2006 Definitive Rating Assigned Aaa (sf)

Cl. A-PB, Affirmed at Aaa (sf); previously on Mar 13, 2006 Definitive Rating Assigned Aaa (sf)

Cl. A-1A, Affirmed at Aaa (sf); previously on Mar 13, 2006 Definitive Rating Assigned Aaa (sf)

Cl. A-M, Affirmed at Aaa (sf); previously on Jul 8, 2010 Confirmed at Aaa (sf)

Cl. X-P, Affirmed at Aaa (sf); previously on Mar 13, 2006 Definitive Rating Assigned Aaa (sf)

Cl. X-C, Affirmed at Aaa (sf); previously on Mar 13, 2006 Definitive Rating Assigned Aaa (sf)

Cl. A-J, Affirmed at A2 (sf); previously on Jul 8, 2010 Downgraded to A2 (sf)

Cl. B, Affirmed at A3 (sf); previously on Jul 8, 2010 Downgraded to A3 (sf)

Cl. C, Affirmed at Baa1 (sf); previously on Jul 8, 2010 Downgraded to Baa1 (sf)

Cl. D, Affirmed at Baa2 (sf); previously on Jul 8, 2010 Downgraded to Baa2 (sf)

Cl. E, Affirmed at Baa3 (sf); previously on Jul 8, 2010 Downgraded to Baa3 (sf)

Cl. F, Affirmed at Ba1 (sf); previously on Jul 8, 2010 Downgraded to Ba1 (sf)

Cl. G, Affirmed at Ba2 (sf); previously on Jul 8, 2010 Downgraded to Ba2 (sf)

Cl. H, Affirmed at B2 (sf); previously on Jul 8, 2010 Downgraded to B2 (sf)

Cl. J, Affirmed at Caa1 (sf); previously on Jul 8, 2010 Downgraded to Caa1 (sf)

Cl. K, Affirmed at Caa3 (sf); previously on Jul 8, 2010 Downgraded to Caa3 (sf)

Cl. L, Affirmed at Ca (sf); previously on Jul 8, 2010 Downgraded to Ca (sf)

Cl. M, Affirmed at Ca (sf); previously on Jul 8, 2010 Downgraded to Ca (sf)

Cl. N, Affirmed at C (sf); previously on Jul 8, 2010 Downgraded to C (sf)

Cl. O, Affirmed at C (sf); previously on Jul 8, 2010 Downgraded to C (sf)

Cl. P, Affirmed at C (sf); previously on Jul 8, 2010 Downgraded to C (sf)

Cl. Q, Affirmed at C (sf); previously on Jul 8, 2010 Downgraded to C (sf)

RATINGS RATIONALE

The affirmations are due to key parameters, including Moody's loan to value (LTV) ratio, Moody's stressed DSCR and the Herfindahl Index (Herf), remaining within acceptable ranges. Based on our current base expected loss, the credit enhancement levels for the affirmed classes are sufficient to maintain their current ratings.

Moody's rating action reflects a cumulative base expected loss of 5.9% of the current balance. At last review, Moody's cumulative base expected loss was 5.7%. Moody's stressed scenario loss is 21.4% of the current balance. Moody's provides a current list of base and stress scenario losses for conduit and fusion CMBS transactions on moodys.com at http://v3.moodys.com/viewresearchdoc.aspx?docid=PBS_SF215255. Depending on the timing of loan payoffs and the severity and timing of losses from specially serviced loans, the credit enhancement level for investment grade classes could decline below the current levels. If future performance materially declines, the expected level of credit enhancement and the priority in the cash flow waterfall may be insufficient for the current ratings of these classes.

Moody's analysis reflects a forward-looking view of the likely range of collateral performance over the medium term. From time to time, Moody's may, if warranted, change these expectations. Performance that falls outside an acceptable range of the key parameters may indicate that the collateral's credit quality is stronger or weaker than Moody's had anticipated during the current review. Even so, deviation from the expected range will not necessarily result in a rating action. There may be mitigating or offsetting factors to an improvement or decline in collateral performance, such as increased subordination levels due to amortization and loan payoffs or a decline in subordination due to realized losses.

Primary sources of assumption uncertainty are the current sluggish macroeconomic environment and varying performance in the commercial real estate property markets. However, Moody's expects to see increasing or stabilizing property values, higher transaction volumes, a slowing in the pace of loan delinquencies and greater liquidity for commercial real estate in 2011. The hotel and multifamily sectors are continuing to show signs of recovery, while recovery in the office and retail sectors will be tied to recovery of the broader economy. The availability of debt capital continues to improve with terms returning toward market norms. Moody's central global macroeconomic scenario reflects an overall sluggish recovery through 2012, amidst ongoing individual, corporate and governmental deleveraging, persistent unemployment, and government budget considerations.

The principal methodology used in this rating was "CMBS: Moody's Approach to Rating Fusion Transactions" published in April 2005.

Moody's review incorporated the use of the excel-based CMBS Conduit Model v 2.50 which is used for both conduit and fusion transactions. Conduit model results at the Aa2 level are driven by property type, Moody's actual and stressed DSCR, and Moody's property quality grade (which reflects the capitalization rate used by Moody's to estimate Moody's value). Conduit model results at the B2 level are driven by a paydown analysis based on the individual loan level Moody's LTV ratio. Moody's Herfindahl score (Herf), a measure of loan level diversity, is a primary determinant of pool level diversity and has a greater impact on senior certificates. Other concentrations and correlations may be considered in our analysis. Based on the model pooled credit enhancement levels at Aa2 and B2, the remaining conduit classes are either interpolated between these two data points or determined based on a multiple or ratio of either of these two data points. For fusion deals, the credit enhancement for loans with investment-grade credit estimates is melded with the conduit model credit enhancement into an overall model result. Fusion loan credit enhancement is based on the underlying rating of the loan which corresponds to a range of credit enhancement levels. Actual fusion credit enhancement levels are selected based on loan level diversity, pool leverage and other concentrations and correlations within the pool. Negative pooling, or adding credit enhancement at the underlying rating level, is incorporated for loans with similar credit estimates in the same transaction.

Moody's uses a variation of Herf to measure diversity of loan size, where a higher number represents greater diversity. Loan concentration has an important bearing on potential rating volatility, including risk of multiple notch downgrades under adverse circumstances. The credit neutral Herf score is 40. The pool has a Herf of 50, essentially the same as at Moody's prior full review.

Moody's ratings are determined by a committee process that considers both quantitative and qualitative factors. Therefore, the rating outcome may differ from the model output.

The rating action is a result of Moody's on-going surveillance of commercial mortgage backed securities (CMBS) transactions. Moody's monitors transactions on a monthly basis through two sets of quantitative tools -- MOST® (Moody's Surveillance Trends) and CMM (Commercial Mortgage Metrics) on Trepp -- and on a periodic basis through a comprehensive review. Moody's prior full review is summarized in a press release dated July 8, 2010. Please see the ratings tab on the issuer / entity page on moodys.com for the last rating action and the ratings history.

Moody's Investors Service did not receive or take into account a third party due diligence report on the underlying assets or financial instruments related to the monitoring of this transaction in the past six months.

DEAL PERFORMANCE

As of the March 17, 2011 distribution date, the transaction's aggregate certificate balance has decreased by 11% to $3.74 billion from $4.23 billion at securitization. The Certificates are collateralized by 294 mortgage loans ranging in size from less than 1% to 8% of the pool, with the top ten loans representing 32% of the pool. The pool includes two loans with credit estimates, representing 1% of the pool. Two loans, representing less than 1% of the pool, have defeased and are collateralized with U.S. Government securities.

Sixty-two loans, representing 29% of the pool, are on the master servicer's watchlist. The watchlist includes loans which meet certain portfolio review guidelines established as part of the CRE Finance Council (CREFC) monthly reporting package. As part of our ongoing monitoring of a transaction, Moody's reviews the watchlist to assess which loans have material issues that could impact performance.

Five loans have been liquidated from the pool since securitization, resulting in an aggregate $29.0 million loss (10% loss severity on average). The pool had not experienced any losses at last review. Seventeen loans, representing 6% of the pool, are currently in special servicing. The master servicer has recognized an aggregate $54.1 million appraisal reduction for ten of the specially serviced loans. Moody's has estimated an aggregate $109.1 million loss (47% expected loss on average) for the specially serviced loans.

Moody's has assumed a high default probability for 13 poorly performing loans representing 5% of the pool and has estimated a $25.8 million aggregate loss (15% expected loss based on a 30% probability default) from these troubled loans.

As of the most recent remittance statement date, the transaction has experienced unpaid accumulated interest shortfalls totaling $7.8 million affecting Classes N through S. Interest shortfalls are caused by special servicing fees, appraisal reductions, extraordinary trust expenses and interest payment reductions due to loan modifications. Moody's expects interest shortfalls to increase due to the pool's high exposure to specially serviced loans.

Moody's was provided with full or partial year 2010 operating results for 80% of the pool. Excluding specially serviced and troubled loans, Moody's weighted average LTV is 104% compared to 108% at Moody's prior review. Moody's net cash flow reflects a weighted average haircut of 11% to the most recently available net operating income. Moody's value reflects a weighted average capitalization rate of 9.0%.

Excluding specially serviced and troubled loans, Moody's actual and stressed DSCRs are 1.37X and 1.01X, respectively, compared to 1.24X and 0.93X at last review. Moody's actual DSCR is based on Moody's net cash flow (NCF) and the loan's actual debt service. Moody's stressed DSCR is based on Moody's NCF and a 9.25% stressed rate applied to the loan balance.

The largest loan with a credit estimate is the Cavalier Country Club Apartment Loan ($25.9 million -- 0.7% of the pool), which is secured by a 32-building apartment complex. Comprised of 744 units, the complex is located in Newark, Delaware. As of June 2010, the property was 94% leased, essentially the same as at last review. The property's performance remains in-line with last review. The loan matures in January 2016 and is amortizing on a 360-month schedule. Moody's current credit estimate and stressed DSCR are Baa3 and 1.3X, respectively, essentially the same as at last review.

The second loan with a credit estimate is the 594 Broadway Loan ($24.0 million -- 0.6% of the pool), which is secured by a 12-story, 217,000 SF Class B office building located at the corner of Broadway and Houston Street in SoHo. As of February 2011, the property was 95% leased compared to 93% at last review. The property is predominantly leased to small tenants that occupy no more than 5% of the net rentable area (NRA). Performance remains in-line with last review. The loan matures in February 2016 and is full term interest only. Moody's current credit estimate and stressed DSCR are A3 and 1.73X, respectively, essentially the same as at last review.

The top three performing conduit loans represent 18% of the pool balance. The largest loan is the Prime Outlet Pool Loan ($301.6 million -- 8% of the pool), which is secured by ten outlet centers located across eight states. The total gross leasable area (GLA) is 3.5 million SF. The loan represents a 50% interest in a $603 million first mortgage loan. As of June 2010, the portfolio was 92% leased compared to 90% at last review. The largest tenants are Vanity Fair Outlet (4% of the GLA; leases expire in 2014); The Gap (3% of the GLA; leases expire in 2013, 2014 and 2019) and Nike (2% of the GLA; lease expires in 2011). The loan matures in July 2016 and is amortizing on a 360-month schedule. The sponsor is Simon Property Group. Performance is stable. Moody's LTV and stressed DSCR are 98% and 1.03X, respectively, compared to 100% and 1.01X at last review.

The second largest loan is the 620 Avenue of the Americas Loan ($205.0 million -- 5% of the pool), which is secured by a 7-story, 670,000 SF mixed-use building located in the Flatiron/Chelsea sub-market of Manhattan. The loan is encumbered with a $30.0 million B-note and $30.0 million of mezzanine debt. As of December 2010 the property was 93% leased compared to 84% at last review. Filene's Basement, which previously occupied 6% of the NRA, vacated when its leased expired in March 2010 and Marshall's leased the space on a lease expiring in October 2020. Local Union SEIU 32BJ is the largest tenant (42% of the NRA; lease expires in December 2013). Moody's LTV and stressed DSCR are 117% and 0.79X, respectively compared to 119% and 0.77X as at last review.

The third largest loan is the Hyatt Center Loan ($161.8 million -- 4% of the pool), which is secured by a 49-story, 1.47 million SF, Class A office building located in the West Loop sub-market of Chicago. The loan represents a 50% interest in a $323.6 million first mortgage loan. In addition, the loan is encumbered with $75 million of mezzanine debt. The largest tenants are Mayer Brown LLP (27% of the NRA; lease expires in June 2020); the Hyatt Corporation (14% of the NRA; lease expires in January 2020) and Goldman Sachs (10% of the NRA; lease expires in March 2020). As of September 2010 the property was 95% leased essentially the same as at last review. Moody's LTV and stressed DSCR are 109% and 0.84X, respectively, essentially the same as at last review.

New York
Polina Margolina
Associate Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Sandra Ruffin
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Investors Service
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Affirms 23 CMBS Classes of WBCMT 2006-C23
No Related Data.
© 2018 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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