NEW YORK--()--Fitch Ratings has downgraded 11 classes and affirmed 11 classes of Banc of America Commercial Mortgage Trust (BACM) commercial mortgage pass-through certificates series 2007-5 due to an increase in expected losses on the specially serviced assets. A detailed list of rating actions follows at the end of this press release.
Fitch modeled losses of 16.6% of the remaining pool; expected losses on the original pool balance total 19.3%, including losses already incurred. The pool has experienced $86.1 million (4.6% of the original pool balance) in realized losses to date. Fitch has designated 25 loans (44.5%) as Fitch Loans of Concern, which includes seven specially serviced assets (14.9%).
As of the December 2012 distribution date, the pool's aggregate principal balance has been reduced by 11.9% to $1.64 billion from $1.86 billion at issuance. No loans have defeased since issuance. Interest shortfalls are currently affecting classes H through S.
The largest contributor to expected losses is the Smith Barney Building loan (6.1% of the pool), which is secured by a 10-story, approximately 190,000-square foot (sf) office building located in the La Jolla submarket of San Diego, CA. The current balance of the 10.5-year interest-only loan is $99.6 million. Rollover has plagued the property since issuance, with the two largest tenants having vacated at their respective lease expirations in 2009 and 2010. As of June 2012, the property was 68.6% occupied, up from around 63% at the same time last year. Net operating income (NOI) remains sharply down, but despite the insufficiency of property cash flow to cover debt service, the loan remains current and with the master servicer.
The next largest contributor to expected losses is the Collier Center loan (8.8%), which is secured by a leasehold interest in a 24-story office tower located in downtown Phoenix, AZ. The subject is part of a mixed-use development and consists of approximately 500,000 sf of office space and 60,000 sf of retail/restaurants. The current balance of the 10-year interest-only loan is $144.5 million. At the end of 2011, the property lost its second largest tenant and year-to-date NOI through June 30, 2012 was down sharply as a result. As of June 2012, servicer-reported occupancy was around 66%.
The third largest contributor to expected losses is the specially-serviced Green Oak Village Place loan (3.9%), which is secured by a 316,236 -sf lifestyle center located in Brighton, MI, about 40 miles northwest of Detroit. The loan re-entered special servicing in March 2012 for imminent default. The special servicer is pursuing foreclosure, which is expected to be completed in first quarter 2013.
Fitch downgrades the following classes and assigns or revises Rating Outlooks and Recovery Estimates (REs) as indicated:
--$185.9 million class A-M to 'BBsf' from 'Asf', Outlook to Negative from Stable;
--$139.4 million class A-J to 'CCsf' from 'CCCsf', RE 15%;
--$20.9 million class B to 'CCsf' from 'CCCsf', RE 0%;
--$13.9 million class C to 'CCsf' from 'CCCsf', RE 0%;
--$20.9 million class D to 'CCsf' from 'CCCsf', RE 0%;
--$18.6 million class E to 'CCsf' from 'CCCsf', RE 0%;
--$11.6 million class F to 'CCsf' from 'CCCsf', RE 0%;
--$18.6 million class G to 'Csf' from 'CCCsf', RE 0%;
--$20.9 million class H to 'Csf' from 'CCCsf', RE 0%;
--$16.3 million class J to 'Csf' from 'CCsf', RE 0%;
--$4.5 million class K to 'Dsf' from 'CCsf', RE 0%.
Fitch affirms the following classes as indicated:
--$43.9 million class A-2 at 'AAAsf', Outlook Stable;
--$281 million class A-3 at 'AAAsf', Outlook Stable;
--$47.6 million class A-SB at 'AAAsf', Outlook Stable;
--$612 million class A-4 at 'AAAsf', Outlook Stable;
--$181.9 million class A-1A at 'AAAsf', Outlook Stable;
--$0 class L at 'Dsf', RE 0%;
--$0 class M at 'Dsf', RE 0%;
--$0 class N at 'Dsf', RE 0%;
--$0 class O at 'Dsf', RE 0%;
--$0 class P at 'Dsf', RE 0%;
--$0 class Q at 'Dsf', RE 0%.
The class A-1 certificates have paid in full. Fitch does not rate the class S certificates. Fitch previously withdrew the rating on the interest-only class XW certificates.
Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 18, 2012 report, 'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria', 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);
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 18, 2012).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria