NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed all classes of ML-CFC Commercial Mortgage Trust, commercial mortgage pass-through certificates, series 2007-8 (ML-CFC 2007-8). A detailed list of rating actions follows at the end of this release.
KEY RATING DRIVERS
The affirmations are due to the relatively stable performance of the collateral pool since Fitch's last rating action. Fitch modeled losses of 20.7% of the remaining pool; expected losses on the original pool balance total 20.7%, including $112.3 million (4.6% of the original pool balance) in realized losses to date.
Fitch has designated 71 loans (51.2%) as Fitch Loans of Concern, which includes 12 specially serviced assets (25.3%). Of the assets in special servicing, nine (24.8%) are classified as either real-estate owned (REO: 22.8%) or in foreclosure (2%). Twelve of the top 15 loans (40.3%) have Fitch loan-to-values greater than 90%. These loans may experience difficulties at the time of refinancing.
The Stable Outlooks on classes A-2 and A-SB reflect the seniority of these classes and their continued paydown.
The Negative Outlooks on classes A-3 and AM reflect the high concentration and uncertainty as to the workout and final disposition of the specially serviced assets and the possibility for further underperformance on loans in the top 15. These classes may also be subject to further downgrades if interest shortfalls to the deal increase significantly.
The Negative Outlooks on the multifamily-directed classes A-1A and AM-A reflect the possibility for continued underperformance of the multifamily collateral (34.4% of the pool). A significant percentage of the multifamily collateral, including the largest loan, is either in special servicing or classified as a Fitch Loan of Concern (combined for 27.3% of the pool).
Distressed classes (those rated below 'Bsf') may be subject to further downgrades as additional losses are realized.
As of the January 2014 distribution date, the pool's aggregate principal balance has been reduced by 22.2% to $1.89 billion from $2.44 billion at issuance. Two loans (0.9%) have been fully defeased, while one loan (1.9%) has been partially defeased. Cumulative interest shortfalls total $27.9 million and are currently affecting classes AJ and AJ-A through T.
The largest contributors to modeled losses are three (25.2%) of the top 10 loans in the pool, two (18.4%) of which are specially serviced.
The largest contributor to modeled losses is the Empirian Multifamily Portfolio Pool 2 (17.3% of the pool). The loan transferred to special servicing in December 2010 for imminent default. The asset consists of a portfolio of 73 multifamily properties totaling 6,892 units located across eight states. The loan was modified in June 2012 splitting the original debt into 73 individual notes corresponding to the 73 multifamily assets that make up the portfolio. During 2012 and 2013, the lender foreclosed on all 14 Georgia properties (1,218 units), the Westland, Michigan property (101 units), and the two South Carolina properties (187 units). Court-appointed receivers are in control of the remaining portfolio. The lender is continuing to pursue foreclosure, while discussions with the borrower continue regarding potential alternatives for the remainder of the portfolio. Five of the foreclosed properties in Georgia have already been sold, while the 12 remaining foreclosed properties in Georgia, Michigan, and South Carolina are expected to be listed for sale in an upcoming auction.
The next largest contributor to modeled losses is the Executive Hills Portfolio loan (5.2%). The loan is secured by a portfolio of nine office properties, all of which are located in the Kansas City MSA. Five of the properties are located in Overland Park, KS and four are located in Kansas City, MO. The submarkets that the properties are located in reported high vacancies ranging from 11%-16%, according to REIS as of the third quarter 2013. Portfolio performance has suffered with a decline in occupancy compared to issuance. As of June 2013, the portfolio occupancy was 74%, down from 92% at issuance. The individual properties have occupancies ranging from 25% to 96%. According to the June 2013 rent roll, approximately 32% of the portfolio square footage is scheduled to roll prior to the loan's July 2017 maturity. For the first six months of 2013, the NOI DSCR was 1.05x compared to 1.65x at issuance.
The third largest contributor to modeled losses is the Towers at University Town Center (2.7%). The loan was transferred to special servicing in July 2010 for delinquent payments. The asset is a 224-unit student housing property located in Hyattsville, MD. The asset became REO in October 2012. As of November 2013, the property was 95.8% occupied. A receiver and a new property manager are both in place for the asset. Leasing efforts are ongoing, although nearby competition remains a concern.
Fitch has affirmed the following classes:
--$90.2 million class A-2 at 'AAAsf'; Outlook Stable;
--$50.6 million class A-SB 'AAAsf'; Outlook Stable;
--$655.8 million class A-3 at 'AAsf'; Outlook Negative;
--$479.6 million class A-1A at 'AAsf'; Outlook Negative;
--$126.9 million class AM at 'Bsf'; Outlook Negative;
--$116.6 million class AM-A at 'Bsf'; Outlook Negative;
--$109.4 million class AJ at 'CCsf'; RE 0%;
--$100.6 million class AJ-A at 'CCsf'; RE 0%;
--$12.2 million class B at 'Csf'; RE 0%;
--$39.6 million class C at 'Csf'; RE 0%;
--$27.4 million class D at 'Csf'; RE 0%;
--$9.1 million class E at 'Csf'; RE 0%;
--$18.3 million class F at 'Csf'; RE 0%;
--$21.3 million class G at 'Csf'; RE 0%;
--$33.5 million class H at 'Csf'; RE 0%;
--$3.3 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 P at 'Dsf'; RE 0%;
--$0 class Q at 'Dsf'; RE 0%;
--$0 class S at 'Dsf'; RE 0%.
The class A-1 certificates have paid in full. Fitch does not rate class T. Fitch previously withdrew the rating on the interest-only class X.
Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 11, 2013 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. 11, 2013).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria