CHICAGO--()--Fitch Ratings affirms 23 classes of Credit Suisse Commercial Mortgage Trust (CSMC), series 2007-C1 commercial mortgage pass-through certificates and changes the rating outlook to negative for classes A-3 and A-1-A.
KEY RATING DRIVERS
The affirmations are based on the stable loss expectations for the underlying collateral pool relative to the previous review. Fitch modeled losses of 17.48% for the remaining pool; expected losses as a percentage of the original pool balance are at 20.0%, including losses already incurred to date.
The revision of the outlook to classes A-3 and A-1-A to negative is due to the ongoing concerns with the high percentage of loans in special servicing and the uncertainty about the ultimate disposition of those assets. Fitch will continue to monitor the performance and valuation of the specially serviced loans, several of which have A / B Note splits, and may take rating actions if the recovery of the A Note proceeds is deemed unlikely or valuations continue to decline.
Fitch has designated 85 loans (56.2%) as Fitch Loans of Concern, which includes 26 specially serviced loans (25.9%).
As of the January 2013 distribution date, the pool's aggregate principal balance has been reduced by approximately 12.72% to $2.94 billion from $3.37 billion at issuance, due to a combination of paydown (7.85%) and realized losses (4.87%). Interest shortfalls totaling $42.8 million are affecting classes T through A-J.
The largest contributor to Fitch's modeled losses is the City Place (5.12% of the pool) loan. The loan is collateralized by a 731,886 square foot (sf) mixed use center located in West Palm Beach, FL. The loan was transferred to the special servicer in April 2010 and a modification consisting of an A/B note structure was completed in January of 2012. The A Note ($100 million) was returned to the master servicer as of August 8, 2012 while the B Note ($50 million) remains with the special servicer. The center, a popular destination in the West Palm Community, is challenged by a lower retail occupancy (88%) than at issuance (95%) and declining cash flow. However, the tenant roster is stable for the next few years with limited lease roll over until 2015.
The second largest contributor to modeled losses is the specially serviced loan, Savoy Park (7.2%). The loan is secured by a multifamily complex consisting of 1,802 units, located in the Harlem neighborhood of New York, NY. The loan was transferred to the special servicer in July 2010 for imminent default. The loan was assumed by the mezzanine lender and a loan modification was completed in 2012. The modification includes an A/B Note split of $160 million A Note and $50 million B Note, and extension to December 11, 2017. The complex's occupancy rate had reached 96% based on the latest servicer information and was projected to return to the master servicer shortly.
The third largest contributor to Fitch's model losses is the CVI Multifamily portfolio (5.65%), secured by 20 multifamily properties consisting of 2,990 units located across seven different metropolitan areas. A federal judge approved the sale and assumption of debt during in 2012. The new ownership group made a significant capital infusion upon securing the portfolio and the loan was modified into an A/B Note split of a $141 million A Note and $38.9 million B Note. The assumption included a paydown of the A Note to $126.9 million and an extension to August 2016. In addition, the new sponsors can sell and release properties during the remaining loan term. Fitch will monitor the performance of the assets as well as the progress of the sponsor's disposition efforts.
Fitch affirms the following classes and revises Outlooks and Recovery Estimates as indicated:
--$31.3 million class A-2 at 'AAAsf'; Outlook Stable;
--$85.1 million class A-AB at 'AAAsf'; Outlook Stable;
--$758.0 million class A-3 at 'AAAsf'; Outlook to Negative from Stable;
--$1.3 billion class A-1A at 'AAAsf'; Outlook to Negative from Stable;
--$212.1 million class A-M at 'Bsf'; Outlook Negative;
--$125.0 million class A-MFL at 'Bsf'; Outlook Negative;
--$286.6 million class A-J at 'CCCsf'; RE0% from RE100%;
--$25.3 million class B at 'CCsf'; RE 0% from RE50%;
--$37.9 million class C at 'Csf'; RE 0%;
--$33.7 million class D at 'Csf'; RE 0%;
--$21.1 million class E at 'Csf'; RE 0%;
--$29.5 million class F at 'Csf'; RE 0%;
--$33.7 million class G at 'Csf'; RE 0%;
--$37.9 million class H at 'Csf'; RE 0%;
--$4.3 million class J at 'Dsf'; RE 0%.
Classes K, L, M, N, O, P, Q, and S remain at 'Dsf' due to realized losses. Fitch has previously withdrawn the ratings in the interest-only classes A-SP and A-X.
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