NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed 24 classes of CD Commercial Mortgage Trust commercial mortgage pass-through certificates series 2007-CD4. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The affirmations are due to stable performance of the remaining pool. Fitch modeled losses of 18.4% of the remaining pool; expected losses on the original pool balance total 15.6%, including $112.9 million (1.7% of the original pool balance) in realized losses to date. Fitch has designated 79 loans (30.8%) as Fitch Loans of Concern, which includes 39 specially serviced assets (23.4%).
As of the January 2014 distribution date, the pool's aggregate principal balance has been reduced by 24.1% to $5.04 billion from $6.64 billion at issuance. Per the servicer reporting, five loans (0.7% of the pool) are defeased. Interest shortfalls are currently affecting classes A-J through S.
The largest contributor to expected losses is comprised of two specially serviced regional mall assets, Citadel Mall (2.7%), and Northwest Arkansas Mall (2.5%). The two assets were originally crossed as a portfolio. The malls are located in Colorado Springs, CO and Fayetteville, AR. The assets have been in special servicing since 2009 and are real estate owned (REO).
The Citadel Mall consists of 1,095,380 square feet (sf) (453,675 sf gross leasable area) (GLA), located in Colorado Springs, CO, anchored by JCPenney and Dillard's which own their own space. As of December 2013, inline occupancy including temporary tenants is currently 94% (75% excluding temporary tenants), and 96.5% overall. Per the special servicer, several lease renewals have been completed and are being negotiated. The upgrades to the mall have received positive reviews from tenants and customers. The special servicer continues to explore large users for the third floor vacancies and have installed a new management and leasing team. The trailing 12 month (TTM) November 2013 comparable inline sales at the mall are approximately $340 per square foot psf.
The Northwest Arkansas Mall is a 589,038 sf shopping mall located in Fayetteville, AR, anchored by Dillard's (not part of the collateral), JCPenney, and Sears with lease expirations in 2050, 2016, and 2014. Sears has exercised a five year renewal option. As of November 2013, inline occupancy including temporary tenants is currently 90% (82% excluding temporary tenants) and 96.4% overall. Per the special servicer, several lease renewals have been completed and are being negotiated. The special servicer continues on-going negotiations with a junior anchor. The TTM November 2013 comparable inline sales at the mall are approximately $282 psf.
The next largest contributor to expected losses is the specially-serviced Riverton Apartments loan (4.5% of the pool), which is secured by a class B, rent-stabilized multifamily housing project, consisting of 1,228 units, located in Harlem, NY. The loan has been specially serviced since August 2008 due to imminent default and remains REO. Performance at the property remains stable with occupancy at 98% and average rents ranging from approximately $1,700-$2,100 for one and two bedroom apartments; respectively. The most recently reported debt service coverage ratio as of year-to-date (YTD) June 30, 2013 is 0.49x. The special servicer continues to gain approval for major capital improvements (MCI), and has stabilized and reduced turnover at the property. Their strategy is to market the property for sale in mid-2014.
The third largest contributor to expected losses is the specially-serviced Westin Lake Las Vegas loan (2.3%), which is secured by a 493 room full-service hotel located in Lake Las Vegas, NV, 20 miles east of the Las Vegas strip. While the resort is an attractive property with competitive amenities, it does not have a casino. The loan has been in special servicing since March 2009 as a result of imminent default and remains REO. The hotel was converted to a Westin in March 2012. Per the special servicer, the property is in very good condition. Per the December 2013 Smith Travel Research Report (STR), the property continues to underperform its competitive set in terms of occupancy and RevPAR with TTM occupancy at 46.4% ADR $114.78 and RevPAR $53.22 compared to 68.7%, $109.93, and $75.51 for its competitive set.
Rating Outlooks on classes A-2B through A-1A remain Stable due to increasing credit enhancement and continued paydown. Despite the high credit enhancement to classes A-MFX and A-MFL, the classes and outlooks are affirmed due to the large number of REO assets and the uncertainty of loss expectations associated with the specially serviced loans.
Fitch affirms the following classes as indicated:
--$26.8 million class A-2B at 'AAAsf', Outlook Stable;
--$464.2 million class A-3 at 'AAAsf', Outlook Stable;
--$89.9 million class A-SB at 'AAAsf', Outlook Stable;
--$1.7 billion class A-4 at 'AAAsf', Outlook Stable;
--$813.9 million class A-1A at 'AAAsf', Outlook Stable;
--$595 million class A-MFX at 'BBsf', Outlook Stable;
--$65 million class A-MFL at 'BBsf', Outlook Stable;
--$585.7 million class A-J at 'Csf', RE 45%;
--$41.2 million class B at 'Csf' RE 0%;
--$90.7 million class C at 'Csf' RE 0%;
--$57.7 million class D at 'Csf' RE 0%;
--$41.2 million class E at 'Csf'RE 0%;
--$49.5 million class F at 'Csf'RE 0%;
--$66 million class G at 'Csf'RE 0%;
--$74.2 million class H at 'Csf'RE 0%;
--$66 million class J at 'Csf'RE 0%;
--$74.2 million class K at 'Csf'RE 0%;
--$24.7 million class L at 'Csf'RE 0%;
--$16.5 million class M at 'Csf'RE 0%;
--$16.5 million class N at 'Csf'RE 0%;
--Interest-only class WFC-X at 'BBB+sf'; Outlook Stable;
--$7.7 million class WFC-1 at 'BBB+sf', Outlook Stable;
--$8.7 million class WFC-2 at 'BBBsf', Outlook Stable;
--$24.1 million class WFC-3 at 'BBB-sf', Outlook Stable.
Fitch does not rate the class O, P, Q and S certificates. Classes A-1 and A-2A are paid in full. Fitch previously withdrew the ratings on the interest-only class XP, XC and XW certificates.
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