NEW YORK--(BUSINESS WIRE)--Fitch Ratings has downgraded two classes and affirmed 24 classes of Banc of America Commercial Mortgage Trust (BACM) commercial mortgage pass-through certificates series 2007-3. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
Fitch modeled losses of 16.9% of the remaining pool; expected losses on the original pool balance total 15.8%, including $63.3 million (1.8% of the original pool balance) in realized losses to date. Fitch has designated 26 loans (35.7%) as Fitch Loans of Concern, which includes 12 specially serviced assets (13.4%).
As of the September 2013 distribution date, the pool's aggregate principal balance has been reduced by 17.5% to $2.9 billion from $3.52 billion at issuance. No loans are defeased. Interest shortfalls are currently affecting classes K through S.
The largest contributor to expected losses is the Pacific Shores Building 9 & 10 loan (6.3% of the pool), which is secured by two buildings in a 10-building office development in Redwood City, CA (Silicon Valley). The collateral consists of a 283,015-square foot (sf) class A office building and a 164,732-sf flex industrial building. The property's cash flow is expected to decline significantly in connection with the sole tenant's lease renewal, a rate of which is considerably lower than the property's average rental rate at the time of securitization. The new lease, which went into effect April 30, 2013, includes rent bumps through its term however, and revenue should increase as rent step-ups occur. The loan remains current.
The next largest contributor to expected losses is the specially-serviced Metropolis Shopping Center loan (3%), which is currently real estate owned (REO). The asset is a 507,050 sf retail property, located in Plainfield, IN (a southwestern suburb of Indianapolis). The loan transferred to special servicing in 2008 and became REO in November 2011. Leases at the property include: JC Penney, with 94,370 sq Ft comprising (19%), leases expiry November 2033; Carmike Cinemas (18%), expiry December 2020; and Dick's Sporting Goods (13%), expiry January 2021. The property is 84.5% occupied as of June 2013. There is minimal upcoming rollover until 2016 when 22% space rolls. Per the special servicer, CBRE has been appointed as management and leasing agent at the property and the asset is not being marketed for sale at this time.
The third largest contributor to expected losses is the specially-serviced Renaissance Mayflower Hotel loan (6.6%), which is secured by a 657-key, full-service luxury hotel located in the DuPont Circle area of downtown Washington, D.C. The loan was transferred to special servicing in June 2013 due to imminent default as a result of cash flow issues at the property. The loan was previously modified and matures on March 1, 2014. Per the July 2013 Smith Travel Research (STR) report, the property is lagging its competitive set in terms of average daily rate (ADR) and revenue per available room (RevPAR) with occupancy of 73.3%, ADR $215.34 and (RevPAR) $162.24 compared to 71.9%, $228.82, $164.58 for its competitive set. Per the special servicer, the lender is currently reviewing information provided and will discuss potential restructuring options with the borrower. The loan remains current.
RATING SENSITIVITY
Rating Outlooks on classes A-2 through A-1A remain Stable due to increasing credit enhancement and continued paydown. Rating Outlooks on classes A-M through A-MFL are Negative due to the potential for further declines in performance associated with some of the larger performing Fitch Loans of Concern.
Fitch downgrades the following classes:
--$30.8 million class G to 'Csf' from 'CCsf'; RE 0%;
--$48.3 million class H to 'Csf' from 'CCsf'; RE 0%.
Fitch affirms the following classes and assigns or revises Rating Outlooks and REs as indicated:
--$116.6 million class A-M at 'BBB-sf'; Outlook to Negative from Stable;
--$100 million class A-MF at 'BBB-sf'; Outlook to Negative from Stable;
--$135 million class A-MFL at 'BBB-sf'; Outlook to Negative from Stable;
--$241.7 million class A-J at 'CCCsf'; RE 45%.
Fitch affirms the following classes:
--$22.5 million class A-2 at 'AAAsf'; Outlook Stable;
--$10.1 million class A-2FL at 'AAAsf'; Outlook Stable;
--$133 million class A-3 at 'AAAsf'; Outlook Stable;
--$69.1 million class A-AB at 'AAAsf'; Outlook Stable;
--$1 billion class A-4 at 'AAAsf'; Outlook Stable;
--$50 million class A-5 at 'AAAsf'; Outlook Stable;
--$607.5 million class A-1A at 'AAAsf'; Outlook Stable;
--$35.2 million class B at 'CCCsf'; RE 0%;
--$48.3 million class C at 'CCCsf'; RE 0%;
--$26.4 million class D at 'CCCsf'; RE 0%;
--$26.4 million class E at 'CCsf'; RE 0%;
--$35.2 million class F at 'CCsf'; RE 0%;
--$35.2 million class J at 'Csf'; RE 0%;
--$43.9 million class K at 'Csf'; RE 0%;
--$26.4 million class L at 'Csf'; RE 0%;
--$4.4 million class M at 'Csf'; RE 0%;
--$17.6 million class N at 'Csf'; RE 0%;
--$4.4 million class O at 'Csf'; RE 0%;
--$8.8 million class P at 'Csf'; RE 0%;
--$6.9 million class Q at 'Dsf'; RE 0%.
The class A-1 certificates have paid in full. Fitch does not rate the class S certificates. Fitch previously withdrew the rating on the interest-only class XW 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'.
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
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=696969
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=804814
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