Fitch Downgrades ML-CFC 2007-5
Fitch Ratings has downgraded seven classes and affirmed 16 classes of ML-CFC Commercial Mortgage Trust's commercial mortgage pass-through certificates, series 2007-5. A detailed list of rating actions follows at the end of this press release.
The downgrades reflect an increase in Fitch modeled losses across the pool. Fitch modeled losses of 19% of the original pool (including losses of 1.9% incurred to date), compared to 15.7% modeled at the previous rating action. The increase is predominantly due to updated valuations of specially serviced loans, many of which experienced declines in cash flow over the past year. There are currently 30 specially serviced loans (33.4%) in the pool.
As of the October 2012 distribution date, the pool's aggregate principal balance was $4.1 billion, down from $4.4 billion at issuance. There are no defeased loans. There are cumulative interest shortfalls in the amount of $49.5 million currently affecting classes AJ through Q.
Fitch has identified 80 loans (45.7%) as Fitch Loans of Concern, which includes 30 specially serviced loans (33.4%). Fitch maintains a negative outlook on the AM classes based on continued concerns regarding declining values on loans in special servicing as well as the pool's high leverage. A number of loans within the top 15 have loan to values (LTV)s in excess of 90%, which can impact a loan's ability to refinance at maturity.
The largest contributor to losses was Peter Cooper Village/Stuyvesant Town (PCV/ST) (19.62%), which comprises 56 multi-story buildings, situated on 80 acres, and includes a total of 11,227 apartments. The loan transferred to special servicing in November 2009. Property performance continues to be below what is needed to service the debt; however, the securitized loan balance per unit ($267,213) is low relative to other NYC multifamily properties. The most recent servicer-reported debt service coverage ratio (DSCR) is 0.66x and occupancy is 99% as of October 2012.
The second largest contributor to losses was Resurgens Plaza (1.99%), which transferred to special servicing in April 2011 and was foreclosed upon in December 2011. The loan is secured by a 393,107 sf office property located in Atlanta, GA. The property is currently REO. As of August 2012, the asset was 66.5% occupied. The special servicer plans to renovate and re-stabilize the asset over the next nine months. However, Fitch expects significant losses based on a recent valuation.
The third largest contributor to losses was H.S.A. Memphis Industrial Portfolio (1.64%), which transferred to special servicing in September 2010 for imminent monetary default. The loan is secured by 15 office/flex/industrial properties with over 1.5 million square feet disbursed across three industrial parks in Memphis, TN. Foreclosure occurred in October 2011 and the properties are currently REO.
Fitch downgrades, affirms Outlooks and assigns Recovery Estimates on the following classes as indicated:
--$341.7 million class AM to 'BBsf' from 'BBBsf'; Outlook Negative;
--$100 million class AM-FL to 'BBsf' from 'BBBsf'; Outlook Negative;
--$77.3 million class B to 'CCsf' from 'CCCsf; RE 0%;
--$33.1 million class C to 'CCsf' from 'CCCsf; RE 0%;
--$77.3 million class D to 'Csf' from 'CCsf'; RE 0%;
--$38.6 million class E to 'Csf' from 'CCsf'; RE 0%;
--$4 million class L to 'Dsf' from 'Csf'; RE 0%.
In addition, Fitch affirms the following classes:
--$8.1 million class A-2 at 'AAAsf'; Outlook Stable;
--$4.5 million class A-2FL at 'AAAsf'; Outlook Stable;
--$3.2 million class A-2FX at 'AAAsf'; Outlook Stable;
--$153.4 million class A-3 at 'AAAsf'; Outlook Stable;
--$167.7 million class A-SB at 'AAAsf'; Outlook Stable;
--$1.09 billion class A-4 at 'AAAsf'; Outlook Stable;
--$245 million class A-4FL at 'AAAsf'; Outlook Stable;
--$1.17 billion class A-1A at 'AAAsf'; Outlook Stable;
--$211.5 million class AJ at 'CCCsf'; RE 15%;
--$175 million class AJ-FL at 'CCCsf'; RE 15%;
--$55.2 million class F at 'Csf'; RE 0%;
--$49.7 million class G at 'Csf'; RE 0%;
--$49.7 million class H at at 'Csf'; RE 0%;
--$16.6 million class J at 'Csf'; RE 0%;
--$11 million class K at 'Csf'; RE 0%;
--$0 class N at 'Dsf'; RE 0%.
Fitch does not rate class M, P, and Q. Class A-1 is paid in full. The rating on class X was previously withdrawn.
Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 21, 2011 report, 'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions', which is available at 'www.fitchratings.com' under the following headers:
Structured Finance >> CMBS >> Criteria Reports
Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (June 6, 2012);
--'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions' (Dec. 21, 2011).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions
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