Market Overview

Fitch Downgrades Five Classes of CGCMT 2006-C5; Affirms thru A-M

NEW YORK--(BUSINESS WIRE)--

Fitch Ratings downgrades five classes of Citigroup Commercial Mortgage Trust, series 2006-C5, commercial mortgage pass-through certificates, due to further deterioration of performance. The downgrades are driven by a decline in value of several loans in special servicing as well as a decline in performance of several large loans since Fitch's last rating action. A detailed list of rating actions follows at the end of this release.

Fitch modeled losses of 8.5% of the current balance which includes expected losses on the specially serviced loans and Fitch loans of concern. Cumulative losses, which include realized losses and current modeled losses, were 10.6% of the original balance compared to 8.6% at the last rating action.

As of the October 2012 distribution date, the transaction's pooled principal balance has been reduced by approximately 21.3% to $1.67 billion from $2.12 billion at issuance. Since Fitch's last rating action, two loans in the top 10 repaid without losses to the trust (Ala Moana Center and NNN WellPoint Operations Center), while one loan, Four Points Sheraton, repaid with a realized loss of 1%. Interest shortfalls are affecting classes E through P.

The largest contributor to losses is the IRET Portfolio Loan (7.3%). The loan is secured by a portfolio of nine office buildings located in Nebraska (four), Missouri (two), Minnesota (two), and Kansas (one) with a total of 936,720 square feet (sf). Portfolio occupancy has declined to 82.5% as of July 2012 and cash flow has declined since Fitch's last rating action. Fitch is modeling the loan to default during the term.

The next largest contributor to losses is the One and Two Securities Center Loan (4.1%). The loan is secured by a 521,957- sf office property located in Atlanta, GA. The loan transferred to the special servicer in December 2010 for imminent default when several tenants vacated upon lease expiration. The loan became REO in November 2011. The property is 79% leased as of Sept. 2012. Recent valuations indicate significant losses.

The third largest contributor to losses is the Courtyard Atlanta Roswell loan (0.4%) which is secured by a 154-room hotel located in Roswell, GA. The property became REO in March, 2011. The special servicer is preparing the asset for disposition as soon as possible. Recent valuations indicate significant losses.

Fitch downgrades the following classes and revises the Outlooks and Recovery Estimates (RE) as indicated:

--$172.6 million class A-J to 'BBsf' from 'BBBsf'; Outlook to Negative from Stable;

--$42.5 million class B to 'CCCsf' from 'BBsf'; RE 75%;

--$21.2 million class C to 'CCCsf' from 'Bsf'; RE 0%;

--$26.5 million class D to 'CCsf' from 'CCCsf'; RE 0%;

--$29.2 million class E to 'Csf' from 'CCsf'; RE 0%.

Fitch affirms the following classes:

--$65.7 million class A-3 at 'AAAsf'; Outlook Stable;

--$92.8 million class A-SB at 'AAAsf'; Outlook Stable;

--$774.3 million class A-4 at 'AAAsf'; Outlook Stable;

--$201.7 million class A-1A at 'AAAsf' Outlook Stable;

--$212.4 million class A-M at 'AAAsf'; Outlook Stable

--$26.5 million class F at 'Csf'; RE 0%;

--$21.2 million class G at 'Csf'; RE 0%.

Classes A-1, A-2, AMP-1, AMP-2, and AMP-3 have paid in full. Classes H through O have realized losses and remain at 'Dsf' RE 0%. Fitch does not rate class P.

Fitch withdrew the ratings of the interest only class XP and XC. (For additional information, see 'Fitch Revises Practice for Rating IO & Pre-Payment Related Structured Finance Securities', dated June 23, 2010.)

Additional information on Fitch's criteria for analyzing U.S. fixed rate CMBS is available in the Nov. 16,

2011 report, 'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions,' which is available at 'www.fitchratings.com' under the following headers:

Structured Finance then CMBS then 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

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679923

Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=662869

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

Fitch Ratings
Primary Analyst
Karen Trebach, +1 212-908-0215
Senior Director
Fitch, Inc.
One State Street Plaza, New York, NY 10004
or
Committee Chairperson
Mary MacNeill, +1 212-908-0785
Managing Director
or
Media Relations:
Sandro Scenga, +1 212-908-0278
Email: sandro.scenga@fitchratings.com

 

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