Fitch Downgrades 4 Classes of CSMC 2006-C4

NEW YORK--()--Fitch Ratings has downgraded four classes and affirmed 17 classes of Credit Suisse Commercial Mortgage Trust, series 2006-C4 (CSMC 2006-C4). A detailed list of rating actions follows at the end of this release.

SENSITIVITY/RATING DRIVERS

Fitch modeled losses of 14.6% of the remaining pool; expected losses on the original pool balance total 15.8%, including losses already incurred. The pool has experienced $136.7 million (3.2% of the original pool balance) in realized losses to date. Fitch has designated 120 loans (60.9%) as Fitch Loans of Concern, which includes 30 specially serviced assets (12.4%).

As of the January 2013 distribution date, the pool's aggregate principal balance has been reduced by 12.5% to $3.74 billion from $4.22 billion at issuance. Three loans (0.3% of the pool) are defeased. Interest shortfalls are currently affecting classes E through S. The top four loans represent approximately 40% of the pool, ranging in size from 21.6% and 4.8%.

The largest contributor to expected losses is the largest loan in the pool 11 Madison Avenue loan (21.6% of the pool), which is secured by a 2.2 million square foot, 29-story office tower located in the Madison Square Park area of Manhattan, NY. The property serves as the U.S. headquarters for Credit Suisse (rated 'A/F1', Outlook Stable by Fitch), which leases 81% of the space. While occupancy remains stable at the property, cash flow appreciation will be constrained by lower asking rates in the market, relative to the rates considered at origination. The loan was underwritten on an issuer basis to relatively tight margins, and although the property continues to perform, Fitch expects the loan may default at maturity as pro forma cash flow that was considered at issuance will be difficult to achieve.

The next largest contributor to expected losses is the specially-serviced Babcock & Brown FX 3 - Sonterra loan (5.2%), which is secured by 14 multifamily properties totaling 3,720 units. The properties are located in Nevada, Texas, Maryland, Florida, Virginia, and South Carolina. The loan transferred to special servicing in February 2009 due to imminent default resulting from deteriorating market conditions. In addition, the servicer indicated that property inspections have revealed deferred maintenance at some of the locations. Fitch expects losses upon liquidation of the assets.

In total, there are currently 30 loans (12.4%) in special servicing which consists of four loans (0.3%) in foreclosure, three loans (0.5%) that are 60 days delinquent, eight loans (1.9%) that are REO, two loans (0.5%) that are current and 13 loans (9.3%) that are 90 days delinquent.

Fitch downgrades the following classes and assigns Recovery Estimates (REs) as indicated:

--$427.3 million class A-M to 'BBB-sf' from 'Asf', Outlook Negative;

--$26.7 million class B to 'CCsf' from 'CCCsf', RE 0%;

--$64.1 million class C to 'CCsf' from 'CCCsf', RE 0%;

--$48.1 million class F to 'Csf' from 'CCsf', RE 0%;

Fitch affirms the following classes as indicated:

--$48.5 million class A-AB at 'AAAsf', Outlook Stable;

--$1.8 billion class A-3 at 'AAAsf', Outlook Stable;

--$150 million class A-4FL at 'AAAsf', Outlook Stable;

--$595.7 million class A-1-A at 'AAAsf', Outlook Stable;

--$341.8 million class A-J at 'CCCsf', RE 0%;

--$37.4 million class D at 'CCsf', RE 0%;

--$21.4 million class E at 'CCsf', RE 0%;

--$42.7 million class G at 'Csf', RE 0%;

--$48.1 million class H at 'Csf', RE 0%.

--$48.1 million class J at 'Csf', RE 0%;

--$27.9 million class K at 'Dsf', RE 0%;

--$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 and A-2 certificates have paid in full. Fitch does not rate the class S certificates. Fitch previously withdrew the ratings on the interest-only class A-X, A-SP and A-Y 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

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

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=696969

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Contacts

Fitch Ratings
Primary Analyst
Scarlett Shao, +1-212-908-9169
Associate Director
Fitch Ratings, 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
sandro.scenga@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Scarlett Shao, +1-212-908-9169
Associate Director
Fitch Ratings, 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
sandro.scenga@fitchratings.com