NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed all classes of COMM Mortgage Trust series 2006-C8 commercial mortgage pass-through certificates. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The affirmations are the result of stable overall pool performance since Fitch's last rating action. Fitch modeled losses of 12.2% for the remaining pool; expected losses on the original pool balance total 13.6%, including $186.5 million (4.9% of the original pool balance) in realized losses to date. Fitch has designated 32 loans (30.6%) as Fitch Loans of Concern, which includes 18 specially serviced assets (12%).
As of the August 2013 distribution date, the pool's aggregate principal balance has been reduced by 28.9% to $2.69 billion from $3.78 billion at issuance. There are currently no defeased loans. Interest shortfalls are currently affecting classes E through S.
The 'AAA' rated classes are expected to remain stable and no near-term rating actions are anticipated. The 'AA' rated class may be subject to future downgrades should pool performance deteriorate and losses on the specially serviced loans exceed projections. In addition, the distressed classes (rated below 'B') may be subject to further rating actions as losses are realized.
The largest contributor to expected losses is a loan secured by 405,000 square feet (sf) of a 689,601 sf regional mall located in Clovis, CA (2.6% of the pool). Property performance has deteriorated since 2009 due to the bankruptcy and subsequent store closings of Mervyn's and Gottschalks, which together represented 27.3% of the center's net rentable area (NRA). The Mervyn's pad was under a ground lease, which was subsequently purchased by Kohl's. Occupancy as of June 2013 is 72% compared to 74% at year-end (YE) 2012 and 77% at YE 2011; below the 87.9% at issuance. The servicer-reported debt service coverage ratio (DSCR) as of YE 2011 is 0.93x, compared to 1.37x at issuance.
The second largest contributor to expected losses is a loan secured by a pari passu portion of a portfolio of 48 self-storage facilities (5.6%). The facilities are located in six states, with the largest concentration in Michigan (50% of allocated loan amount). At issuance, the loan was underwritten to a stabilized cash flow based on anticipated occupancy improvement at market rents. The most recent servicer reported combined occupancy as of YE 2012 is 80.9%, compared to 76.8% at issuance. The servicer-reported YE 2012 DSCR is 1.25x. As of July 2013, $1.7 million remains in the debt service reserve, which cannot be released until the property achieves a trailing six-month DSCR of 1.20x. The loan remains current and with the master servicer.
The third largest contributor to expected losses is a loan secured by a portfolio of nine (12 at issuance) recreational vehicle resort communities located in eight different states (2.2%). The loan was transferred to the special servicer in November 2009 due to imminent default. A forbearance agreement was executed in July 2010; thereby the loan was restructured into an A/B split and the maturity date was extended to April 2012. The borrower defaulted again in September 2011 due to cash flow deficiencies. A forbearance agreement was executed in June 2012, by which the borrower is required to turn over all cash flow and eventually hand over the collateral through a deed in lieu (DIL) if the borrower fails to liquidate the properties and pay off the loan. Since then, three properties were sold and the net proceeds were applied to pay down the principal balance. The special servicer is currently in the process of repossessing the properties via a foreclosure action. So far, two properties have become real estate owned (REO). Based on servicer provided asset valuations, significant losses are expected upon liquidation of these assets.
Fitch affirms the following classes as indicated:
--$78.4 million class A-3 at 'AAAsf', Outlook Stable;
--$60.9 million class A-AB at 'AAAsf', Outlook Stable;
--$1.1 billion class A-4 at 'AAAsf', Outlook Stable;
--$481.8 million class A-1A at 'AAAsf', Outlook Stable;
--$377.6 million class A-M at 'AAsf', Outlook Negative;
--$302.1 million class A-J at 'CCCsf', RE 80%;
--$28.3 million class B at 'CCsf', RE 0%;
--$42.5 million class C at 'CCsf', RE 0%;
--$37.8 million class D at 'CCsf', RE 0%;
--$23.6 million class E at 'Csf', RE 0%;
--$28.3 million class F at 'Csf', RE 0%;
--$51.9 million class G at 'Csf', RE 0%;
--$37.8 million class H at 'Csf', RE 0%;
--$16.5 million class J at 'Dsf', RE 0%;
--$0 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%.
The classes A-1, A-2A and A-2B have paid in full. Fitch does not rate the class P, Q and S certificates. Fitch previously withdrew the ratings on the interest-only class X-P and X-S 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 then CMBS then Criteria Reports
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (May 24, 2013);
--'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