Fitch Take Various Actions on MLMT 2004-MKB1

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has upgraded three and downgraded two classes of Merrill Lynch Mortgage Trust 2004-MKB1 commercial mortgage pass-through certificates. A detailed list of rating actions follows the end of the press release.

The rating downgrades are the result of Fitch expected losses on specially serviced loans. The upgrade of class D is to due to sufficient credit enhancement to offset Fitch expected losses.

Fitch modeled losses of 1.8% of the remaining pool balance, approximately $10.8 million, from the loans in special servicing and the loans that are not expected to refinance at maturity based on Fitch's refinance test.

As of the July 2011 distribution date, the pool's collateral balance has paid down 41.6% to $424 million from $980 million at issuance. Seven of the remaining loans have defeased (26%) and two loans (3.8%) are in special servicing.

The largest specially serviced asset (2.3%), is secured by a 113,556 square foot (sf) office property located in Memphis, TN. The loan transferred to special servicing in April 2009 and the special servicer foreclosed on the property in October 2009. The special servicer is currently marketing the property for sale.

The second largest specially serviced loan (1.5%) is secured by 228-unit multifamily property located in Tampa, FL. The loan transferred to special servicing in February 2009 and the borrower filed bankruptcy a year later. The borrower and special servicer submitted to a consensual plan for the special servicer to take title to the property. The special servicer took title to the property in March 2011 and is working to stabilize the property prior to marketing it for sale.

Fitch downgrades and revises the Outlooks on the following classes as indicated;

--$2.5 million class N downgraded to 'B-/LS5' from 'B/LS5'; Outlook to Stable from Negative;

--$3.7 million class P downgraded to 'CCC/RR1' from 'B-/LS5'.

In addition, Fitch upgrades the following classes:

--$25.7 million class D upgraded to 'AAA/LS4' from 'AA/LS3'; Outlook Stable;

--$11 million class E upgrade to 'AA/LS5' from 'A+/LS4'; Outlook Stable;

--$13.5 million class F upgrade to 'A/LS5' from 'A-/LS4; Outlook Stable.

Finally, Fitch affirms and revises the loss severity (LS) ratings and Outlook as indicated;

--$33.8 million class A-3 at 'AAA/LS1'; Outlook Stable;

--$169.7 million class A-4 at 'AAA/LS1'; Outlook Stable;

--$105.1 million class A-1A at 'AAA/LS1'; Outlook Stable;

--$27 million class B at 'AAA', LS revised to 'LS4' from 'LS3', Outlook Stable;

--$11 million class C at 'AAA', LS revised to 'LS5' from 'LS4', Outlook Stable;

--$12.3 million class G at 'BBB', LS revised to 'LS5' from 'LS4', Outlook Stable;

--$11 million class H at 'BBB-', LS revised to 'LS5' from 'LS4', Outlook Stable;

--$3.7 million class J at 'BB+/LS5'; Outlook Stable;

--$4.9 million class K at 'BB/LS5'; Outlook Stable;

--$4.9 million class L at 'BB-/LS5'; Outlook to Stable from Negative;

--$4.9 million class M at 'B+/LS5'; Outlook to Stable from Negative.

Fitch does not rate the $9.8 million class Q. Class A-1 and Class A-2 have been paid in full. Classes XC and XP have been withdrawn.

Additional information on Fitch's amended criteria for analyzing U.S. CMBS is available in the Nov. 17, 2010 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'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (Aug. 13, 2010);

--'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions' (Nov. 17, 2010).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547326

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

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=574208

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