Fitch Upgrades Wachovia 2006-WHALE 7

Fitch Ratings has upgraded and removed from Rating Watch Positive two classes, upgraded one and affirmed five distressed classes of Wachovia Bank Commercial Mortgage Trust 2006-WHALE 7. A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The upgrades are the result of the disposition of two properties for slightly better recoveries than anticipated at Fitch's previous full review in November 2013. The Westin Aruba REO was disposed for approximately $110 million which resulted in a loss severity of approximately 33%. While the gross proceeds of the sale exceeded the former loan amount, there were almost $46 million in fees and expenses that were repaid prior to principal recovery. The Colonial Mall Myrtle Beach, now known as the Myrtle Beach Mall, was paid off as part of a modification and forbearance agreement executed in December 2010. Net proceeds were approximately $15 million and with $160,890 in fees and expenses, resulted in a loss severity of approximately 46%.

One loan remains in the transaction, The Jameson Hotel Portfolio. The loan is currently collateralized by approximately 6,600 rooms in 103 properties across 16 states in the Southeast and Midwest. The loan was transferred to special servicing due to imminent maturity default in August 2011. The current borrower and special servicer negotiated a modification and forbearance agreement whereby the loan was paid down by approximately $10 million and $13.4 million of new equity would be used to convert the Jameson hotels under Choice and Wyndham flags. The loan was extended until December 2014 with an additional one-year extension subject to a debt yield test and an interest rate increase. According to the special servicer, the conversions have been completed and were slightly under the budgeted $15.4 million conversion estimate. A recent appraisal values both the as-is and stabilized value of the portfolio to be in excess of the securitized debt. The loan continues to be categorized as Performing Matured.

The portfolio now operates under mostly Baymont and Quality Inn flags, with several Howard Johnsons, Comfort Inns, Econolodges and one Days Inn and Jameson hotel each. Fitch received a trailing twelve month operating statement as of September 2013. Performance has declined since issuance. Although revenues have been relatively stable since 2011, expenses grew each reporting period and do not include the flag conversion expenses. Although Fitch recognizes that operations may improve after the flag conversions, Fitch used the in-place cash flow with a stressed mortgage constant and capitalization rates in its analysis. In addition, Fitch applied standard furniture, fixtures and equipment (FF&E) expenses of 5% of revenues, as well as an adjustment to the franchise fees per the asset manager's estimate of actual future fees.

RATING SENSITIVITIES

The rating Outlook of Class G is Stable as no future rating changes are expected. Given the concentration with only one specially serviced loan remaining, further upgrades are not expected considering the higher probability of an additional default. In addition, the current ratings could withstand over a 25% reduction in Fitch net cash flow so downgrades are not expected unless the loan re-defaults and performance and/or value declines significantly.

Fitch upgrades the following classes as indicated and removes from Rating Watch Positive:

--$43.2 million class G to 'BBBsf' from 'Bsf'; Outlook Stable;

--$64.9 million class H to 'CCCsf' from 'CCsf'; RE 100%.

The following class is upgraded as follows:

--$21.9 million class J to 'CCCsf' from 'CCsf'; RE 100%.

The $5.8 million class K and zero balance classes L, WA, CM, and BP-2 are affirmed at 'Dsf'/RE 0% based on previously incurred realized losses.

Pooled classes A-1 through F, interest-only class X-1A and rake classes KH-1, KH-2, BH-1 through BH-4, BP-1, MB-1 through MB-4 UV and WB have paid in full. Class X-1B was previously withdrawn.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (May 24, 2013);

--'Criteria for Rating Caps and Limitations in Global Structured Finance Transactions' (June 12, 2013);

--'Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions' (Sept. 20, 2013).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=709840

Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=718468

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=827236

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