NEW YORK--(BUSINESS WIRE)--Fitch maintains five classes on Rating Watch Negative and affirms seven classes of COMM Mortgage Trust, Series 2006-FL12 (COMM 2006-FL12). A detailed list of rating actions follows at the end of this release.
KEY RATING DRIVERS
The final remaining loan in the trust is the Atlantis (formerly referred to as Kerzner International), which is primarily comprised of a 3,000+ key resort and casino located in the Bahamas. At issuance the Atlantis (Kerzner) loan represented 23.7% of the transaction. Given the increased concentration in the Bahamas, the transaction's rating linkage to this sovereign is significant.
Fitch's Criteria for Rating Securitizations in Emerging Markets limit securitization ratings to a maximum of three to four notches above a country's Issuer Default Rating (IDR) and country ceiling depending upon the mitigants available to address potential transfer and convertibility risk arising from capital controls being imposed. The transactions have certain mechanisms available, including servicer advancing, which would allow for continuation of transaction cash flows in the event of an interruption of revenues from the Bahamas collateral owing to the imposition of capital controls. In addition, given the large draw of American tourists that vacation at the Atlantis resort, a considerable portion of revenues for the collateral is collected outside of the Bahamas in U.S. dollars through credit card sales. These factors support a rating level of up to four notches above an investment-grade country ceiling; however, this would fall short of a level of 'AAsf' or 'AAAsf', resulting in the Negative Watch.
The Atlantis property is a diverse portfolio of real estate. The main collateral consists of: the 3,023-key Atlantis Resort and casino, Paradise Island; 600-room all-suite hotel tower; 495-unit condominium hotel; 40 acres of water attractions; 106-key One & Only Ocean Club and 18-hole Ocean Club Golf Course; water treatment and desalinization facility; 63-slip Marina at Atlantis and associated retail at Marina Village. As of year-end 2013 the portfolio reported a net cash flow debt service coverage ratio of 5.76x, compared with 6.02x in 2012. A recent value estimate indicates the collective value of the collateral would result in full repayment of the rated debt. The loan, after an earlier modification, was extended and the final maturity is in September 2014.
Recent press indicates the Atlantis loan has been circled by a consortium of issuers for the purpose of refinancing the existing debt. Fitch anticipates the refinance will be executed prior to its maturity in September 2014; however, should the loan not make significant progress towards take-out financing over the next few months, downgrades between one to two rating categories are expected.
Fitch maintains the following classes on Rating Watch Negative:
--$115.8 million class A-J 'AAAsf';
--$71.9 million class B 'AA+sf';
--$50.5 million class C 'AA+sf';
--$55.7 million class D 'AAsf';
--$41.4 million class E 'AA-sf'.
Fitch affirms the following classes and revises the Outlook as indicated:
--$41.4 million class F at 'Asf'; Outlook Stable;
--$39.5 million class G at 'BBBsf'; Outlook to Stable from Negative;
--$24.6 million class H at 'BBsf'; Outlook to Stable from Negative;
--$19.3 million class J at 'Dsf'; RE 90%;
--$63.3 million class KR1 at 'BBB-sf'; Outlook Stable;
--$19.7 million class KR2 at 'BBsf' ; Outlook Stable;
--$55.8 million class KR3 at 'CCCsf'; RE 100%.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (May 20, 2014);
--'Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions' (Sept. 20, 2013)
--'Criteria for Ratings Caps and Limitations in Global Structured Finance Transactions' (May 28, 2014)
--'Criteria for Rating Securitizations in Emerging Markets' (June 27, 2013)
--'Criteria for Sovereign Risk in Developed Markets for Structured Finance and Covered Bonds' (April 11, 2014)
Applicable Criteria and Related Research:
Criteria for Sovereign Risk in Developed Markets for Structured Finance and Covered Bonds
Criteria for Rating Securitizations in Emerging Markets
Global Structured Finance Rating Criteria