CHICAGO--(BUSINESS WIRE)--Fitch Ratings has downgraded four classes and affirmed 14 classes of Citigroup Commercial Mortgage Trust (CGCMT) commercial mortgage pass-through certificates series 2006-C5 due to realized losses and further certainty of losses from loans in special servicing. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
Fitch modeled losses of 11.8% of the remaining pool; expected losses on the original pool balance total 12.2%, including $80.6 million (3.6% of the original pool balance) in realized losses to date. Fitch has designated 66 loans (37.9%) as Fitch Loans of Concern, which includes 18 specially serviced assets (12.1%).
As of the October 2013 distribution date, the pool's aggregate principal balance has been reduced by 27.4% to $1.63 billion from $2.24 billion at issuance. No loans are defeased. Interest shortfalls are currently affecting classes D through P.
The largest contributor to expected losses is the IRET Portfolio loan (7.5% of the pool), which is secured by a portfolio of nine office buildings located in Nebraska (four), Missouri (two), Minnesota (two), and Kansas (one). The properties encompass 936,720 sf and were built between 1982 and 2001. Portfolio occupancy has been steadily declining. As of April 2013 occupancy was 82.8% down from 100% at year-end 2010. This is largely due to the loss of Assurant Inc. (6.4% NRA) as well as several tenants downsizing their space. Two new tenants (2.5% of NRA) have signed leases and will be taking occupancy in 2014.
The next largest contributor to expected losses is the specially-serviced One and Two Securities Centre asset (4.1%), which is a 521,957-sf office property is located in the Buckhead neighborhood of Atlanta, GA. The loan transferred to the special servicer in December 2010 for imminent default when several tenants vacated on lease expiration. The asset became REO on Nov. 1, 2011. The property is being marketed for sale.
The third largest contributor to expected losses is the specially-serviced Courtyard Atlanta Roswell (0.4%), which is a 154 unit limited service hotel in suburban Atlanta. The loan transferred to the special servicer in November 2009 and the trust took title to the property in March 2011. The property subsequently lost its Marriott flag in July 2012 and performance has decreased substantially. The trailing twelve August 2013 NOI was approximately negative $1,129,000 and occupancy was approximately 19%. The property is being marketed for sale. Due to the fees incurred it is estimated that the losses may exceed the loan balance.
Rating Outlooks on the super senior classes remain Stable due to increasing credit enhancement and continued paydown. Downgrades to classes A-M through F are possible should the disposition of loans in special servicing result in higher than expected losses. No upgrades to any of the classes are anticipated.
Fitch downgrades the following classes and assigns or revises Recovery Estimates (REs) as indicated:
--$172.6 million class A-J to 'CCCsf' from 'BBsf', RE 85%;
--$42.5 million class B to 'CCsf' from 'CCCsf', RE 0%;
--$21.2 million class C to 'CCsf' from 'CCCsf', RE 0%;
--$26.5 million class D to 'Csf' from 'CCsf', RE 0%.
Fitch affirms the following class and revises the Rating Outlook as indicated:
--$212.4 million class A-M at 'AAAsf', Outlook to Negative from Stable:
Fitch affirms the following classes as indicated:
--$52.9 million class A-3 at 'AAAsf', Outlook Stable;
--$58.7 million class A-SB at 'AAAsf', Outlook Stable;
--$774.3 million class A-4 at 'AAAsf', Outlook Stable;
--$190 million class A-1A at 'AAAsf', Outlook Stable;
--$29.2 million class E at 'Csf', RE 0%;
--$26.5 million class F at 'Csf', RE 0%;
--$18.9 million class G at 'Dsf', RE 0%;
--$0 class H at 'Dsf', RE 0%;
--$0 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%.
Fitch previously withdrew the ratings on the interest-only class XP and XC certificates. Classes A-1 and A-2 have paid in full.
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
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria