NEW YORK--(BUSINESS WIRE)--Fitch Ratings has downgraded three classes and affirmed 14 classes of Wachovia Bank Commercial Mortgage Trust's commercial mortgage pass-through certificates, series 2007-C30 due to an increase in Fitch's expected loss. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
Fitch modeled losses of 17.3% of the remaining pool; expected losses on the original pool balance total 16.1%, including losses already incurred. The pool has experienced $69.6 million (0.9% of the original pool balance) in realized losses to date. Fitch has designated 69 loans (52.2%) as Fitch Loans of Concern, which includes 41 specially serviced assets (35.5%).
The ratings on the super senior classes are expected to remain stable. The A-M and A-MFL classes may be subject to a downgrade if there is further deterioration to the pool's cash flow performance and/or decrease in value of the specially serviced loans. Additional downgrades to the distressed classes (those rated below B) are expected as losses are realized.
As of the March 2013 distribution date, the pool's aggregate principal balance has been reduced by 11.9% to $6.96 billion from $7.9 billion at issuance. No loans are defeased. Interest shortfalls are currently affecting classes C through S.
The largest contributor to expected losses is the specially-serviced Peter Cooper Village/Stuyvesant Town (PCV/ST) loan (21.6% of the pool), which is secured by 56 multi-story apartment buildings, situated on 80 acres, and includes a total of 11,227 units. The special servicer gained control of the property by acquiring the mezzanine debt of the borrower. The special servicer reports that as of third-quarter 2012, the property was 99% leased. Performance has continued to improve which can be somewhat attributed to lower labor costs and management fees. A settlement has been reached in the Roberts Litigation. This settlement appears to be a positive in the resolution of the loan as it addresses amounts due on historical and future rents. However Fitch expects the workout will continue for at least the next 18 months as finding a new buyer will likely be difficult until appeals and final rulings occur. The property is also still undergoing some repairs to the basements of the buildings from Hurricane Sandy. The special servicer reports that all damages should be recovered through ample insurance proceeds.
The next largest contributor to expected losses is the Five Times Square loan (7.7%), which is secured by a leasehold interest in a 1.1 million square foot (sf) office property located in the heart of Times Square in New York City. The December 2011 year-to-date (YTD) OSAR reflects a DSCR of 1.03x and the September 2012 OSAR has a DSCR of 1.09x with an occupancy of 100%. The property is 96.7% leased to Ernst & Young through 2022 with two 10-year extension options. Red Lobster, the largest retail tenant, recently extended the lease term for an additional five years. The loan is highly leveraged, with the A-note at $973 per sf and total debt at $1,095 per sf.
The third largest contributor to expected losses is the specially-serviced One Congress Street loan (2.7%), which is secured by a 1.2 million sf building which features approximately 313,527 sf of office and retail space and a parking garage with approximately 886,473 sf in downtown Boston, MA near City Hall. The loan transferred to special servicing in November 2011 due to imminent monetary default. As of September 2012, the building's office and retail occupancy is at 71% up from 33% in January 2012 and the OSAR reflects a year end 2011 DSCR of 0.86x for the A and B notes. The Special Servicer and the borrower have reached an agreement on the terms of a modification and documents are being finalized by counsel.
Fitch downgrades the following classes and assigns or revises Rating Outlooks as indicated:
--$540.3 million class A-M to 'BBB-sf' from 'BBBsf'; Outlook to Negative from Stable;
--$250 million class A-MFL to 'BBB-sf' from 'BBBsf'; Outlook to Negative from Stable;
--$79 million class K to 'Csf' from 'CCsf'; RE 0%.
Fitch affirms the following classes:
--$288.2 million class A-3 at 'AAAsf'; Outlook Stable;
--$195.5 million class A-4 at 'AAAsf'; Outlook Stable;
--$102.4 million class A-PB at 'AAAsf'; Outlook Stable;
--$1.9 billion class A-5 at 'AAAsf'; Outlook Stable;
--$2.2 billion class A-1A at 'AAAsf'; Outlook Stable;
--$671.8 million class A-J at 'CCCsf'; RE 45%.
--$49.4 million class B at 'CCCsf'; RE 0%;
--$79 million class C at 'CCCsf'; RE 0%;
--$69.2 million class D at 'CCsf'; RE 0%;
--$59.3 million class E at 'CCsf'; RE 0%;
--$69.2 million class F at 'CCsf'; RE 0%;
--$98.8 million class G at 'CCsf'; RE 0%;
--$79 million class H at 'CCsf'; RE 0%;
--$88.9 million class J at 'CCsf'; RE 0%.
The Class A-1 and A-2 certificates have paid in full. Fitch does not rate the class L, M, N, O, P, Q and S certificates. Fitch previously withdrew the ratings on the interest-only class X-P, X-C and X-W 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