NEW YORK--()--Fitch Ratings downgrades nine classes of commercial mortgage pass-through certificates from Banc of America Commercial Mortgage Trust (BACM), series 2007-1. A detailed list of rating actions follows at the end of this release.
The downgrades reflect an increase in Fitch modeled losses across the pool, which includes assumed losses on loans in special servicing and on performing loans with declines in performance indicative of a higher probability of default. Fitch modeled losses of 18.8% of the remaining pool (14.8% cumulative transaction losses, which includes losses realized to date) based on expected losses on the specially serviced loans and loans that are not expected to refinance at maturity. The Negative Outlooks reflect the uncertainty regarding the workouts of recent transfers of large loans to special servicing, the final disposition of other specially serviced assets and the pool's high percentage of Fitch Loans of Concern.
As of the November 2012 distribution date, the pool's aggregate principal balance has decreased 24.7% to $2.28 billion from $3.15 billion at issuance. As of November 2012, there are cumulative interest shortfalls in the amount of $18.5 million, affecting classes E through Q.
In total, there are 14 loans (27.8% of the pool) in special servicing, including eight assets (2.2%) that are real estate owned (REO). At Fitch's prior review, there were 23 loans (23.5%) in special servicing with six REO assets (1.6%).
The largest contributor to modeled loss is the largest loan in the transaction, Skyline Portfolio (11.9% of the pool). The portfolio, which consists of eight office buildings in Falls Church, VA, transferred to special servicing in March 2012 for imminent default. The sponsor, Vornado, cited the Base Realignment and Closure statute (BRAC), as contributing to recent and upcoming vacancies at the properties. In addition, the sponsor has indicated that there may be significant capital required to re-tenant the properties. The pari passu loan is under a forbearance agreement as of November 2012.
The second largest contributor to modeled loss is the second largest specially serviced loan (9.6% of the pool), secured by the Solana office complex located in Westlake, TX. The pari passu loan was transferred to special servicing in March 2009 for imminent default and has since been modified. The reported occupancy is approximately 67%. The latest reported appraisal from May 2012 indicates a value significantly below the loan amount.
The largest contributor to modeled loss of the loans not in special servicing is the StratREAL Industrial Portfolio I (8.3% of the pool). The collateral consists of a portfolio of industrial properties with the majority of properties located in the Memphis, TN and Columbus, OH areas. The servicer reported occupancy for the portfolio was 77.8% as of second-quarter 2012, compared with a combined 94.5% at issuance.
Fitch downgrades and assigns or revises Recovery Estimates (RE) as follows:
--$214.5 million class A-MFX to 'BBBsf' from 'AAAsf'; Outlook Negative;
--$100 million class A-MFL to 'BBBsf' from 'AAAsf'; Outlook Negative;
--$259.5 million class A-J to 'CCCsf' from 'Bsf', RE 65%;
--$27.5 million class B to 'CCCsf' from 'B-sf', RE 0%;
--$39.3 million class F to 'CCsf', RE 0% from 'CCCsf';
--$35.4 million class G to 'Csf', RE 0% from 'CCsf';
--$35.4 million class H to 'Csf', RE 0% from 'CCsf';
--$39.3 million class J to 'Csf', RE 0% from 'CCsf';
--$7.9 million class K to 'Csf', RE 0% from 'CCsf'.
Fitch also affirms the following classes and revises REs as follows:
--$273.9 million class A-3 at 'AAAsf'; Outlook Stable;
--$56.6 million class A-AB at 'AAAsf'; Outlook Stable;
--$698.7 million class A-4 at 'AAAsf'; Outlook Stable;
--$347.1 million class A-1A at 'AAAsf'; Outlook Stable;
--$35.4 million class C at 'CCCsf', RE 0%;
--$27.5 million class D at 'CCCsf', RE 0%;
--$39.3 million class E at 'CCCsf', RE 0%;
--$11.8 million class L at 'Csf', RE 0%;
--$7.9 million class M at 'Csf', RE 0%;
--$3.9 million class N at 'Csf', RE 0%;
--$7.9 million class O at 'Csf', RE 0%;
--$11.8 million class P at 'Csf', RE 0%.
Classes A-1 and A-2 are paid in full. Fitch does not rate the $3.9 million class Q. Fitch previously withdraw the rating on the interest-only class XW.
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