Fitch Downgrades One Distressed Class of CGCMT 2006-C4

CHICAGO--()--Fitch Ratings has downgraded one class and affirmed 16 classes of Citigroup Commercial Mortgage Trust (CGCMT) commercial mortgage pass-through certificates series 2006-C4 as increased loss expectations were offset by paydown and defeasance. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

Fitch modeled losses of 6.7% of the remaining pool; expected losses on the original pool balance total 10%, including $117.5 million (5.2% of the original pool balance) in realized losses to date. Fitch has designated 31 loans (29.4%) as Fitch Loans of Concern, which includes six specially serviced assets (4.2%).

As of the July 2014 distribution date, the pool's aggregate principal balance has been reduced by 28.6% to $1.61 billion from $2.26 billion at issuance. Per the servicer reporting, nine loans (15% of the pool) are defeased, including the largest loan in the pool. Interest shortfalls are currently affecting classes E through P.

The largest contributor to expected losses is the specially-serviced Bossier Corners asset (1.2% of the pool), which is secured by a 147,900 sf retail center located in Bossier City, LA. The loan was transferred to the special servicer in August 2011 due to imminent default. Foreclosure occurred and the asset became REO in June, 2013. The property is approximately 75% occupied. The special servicer is preparing the property to be marketed for sale later this year.

The next largest contributor to expected losses is the Bristol Pointe Apartment Homes loan (1.6%), which is secured by a 508 unit apartment complex located in Norcross, GA. The loan has been modified twice and was returned to the master servicer in 2011 after being bifurcated into a $15.2 million A-Note and an $11 million B-note.

The third largest contributor to expected losses is the Du Bois Mall (1.6%), which is secured by a 439,451-sf retail mall located in DuBois, PA, approximately 90 miles northeast of Pittsburgh. Occupancy levels have historically been steady, around the low 90% range, since issuance. As of YE 2013, occupancy was 85%. NOI declined by 17% compared to YE 2012 due to lower rental rates and increased expenses. Additionally, approximately 30% of the space rolls in the next year.

RATING SENSITIVITIES

Rating Outlooks on the senior classes remain Stable due to increasing credit enhancement due to continued paydown. Rating Outlooks on class B is Negative due to potential erosion in credit enhancement from disposition of loans in special servicing as well as several highly levered large loans in the pool. If losses on the specially serviced loans exceed Fitch's expectations or should performance deteriorate on the larger performing loans downgrades to these classes are possible.

Fitch downgrades the following class as indicated:

--$22.6 million class E to 'Csf' from 'CCsf'; RE 0%.

Fitch affirms the following classes and revises Rating Outlooks as indicated:

--$800.6 million class A-3 at 'AAAsf'; Outlook Stable;

--$253.2 million class A-1A at 'AAAsf'; Outlook Stable;

--$226.4 million class A-M at 'AAAsf'; Outlook Stable;

--$164.1 million class A-J at 'BBsf'; Outlook to Stable from Negative;

--$50.9 million class B at 'Bsf'; Outlook Negative;

--$25.5 million class C at 'CCCsf'; RE 35%.

--$31.1 million class D at 'CCsf'; RE 0%;

--$28.3 million class F at 'Csf'; RE 0%;

--$12.7 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 does not rate the class P certificates. Fitch previously withdrew the rating on the interest-only class X certificates.

Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the December 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 then CMBS then Criteria Reports

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (Aug. 2014);

--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (December 2013).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724961

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=847975

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Primary Analyst
R. Brook Sutherland, +1 312-606-2346
Director
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Committee Chairperson
Mary MacNeill, +1 212-908-0785
Managing Director
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
R. Brook Sutherland, +1 312-606-2346
Director
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Committee Chairperson
Mary MacNeill, +1 212-908-0785
Managing Director
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com