Fitch Downgrades Two Classes of CGCMT 2007-C6
NEW YORK--(BUSINESS WIRE)--Fitch Ratings has downgraded two and affirmed 24 classes of Citigroup Commercial Mortgage Trust's commercial mortgage pass-through certificates, series 2007-C6. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The downgrades reflect an increase in the expected losses and lack of progress disposing of assets in specially servicing. At Fitch's last rating action there were 41 loans in special servicing. Since this time, one loan has been resolved and five additional loans have transferred to the special servicer. Fitch modeled losses of 19% of the remaining pool; expected losses on the original pool balance total 16.6%, including $66.4 million (1.4% of the original pool balance) in realized losses to date.
Fitch has designated 107 loans (39.5%) as Fitch Loans of Concern, which includes the 44 specially serviced assets (15%). 13 loans within the top 15 have Fitch loan to values (LTVs) in excess of 100%, including two loans in special servicing.
As of the August 2014 distribution date, the pool's aggregate principal balance was $3.8 billion, down from $4.8 billion at issuance. There is one defeased loan (0.04%). Cumulative interest shortfalls in the amount of $47.5 million are currently affecting classes C through S.
The largest contributor to modeled losses is Moreno Valley Mall (2.1% of the pool). The collateral consists of 472,844 square feet (sf) of a 1.1 million sf regional mall in Moreno Valley, CA, just east of Riverside, CA. The mall is anchored by J.C. Penney, Macys, and Sears, which are not part of the collateral. The loan was originally transferred to special servicing as part of the GGP bankruptcy and was modified. The loan re-defaulted and became REO through a deed in lieu of foreclosure in February 2011. Recent leasing efforts have resulted in increased occupancy at the mall. In-line occupancy at the property, including temporary tenants, is 90.5% as of March 2014 and 62.6% without temporary tenants compared to 88.8%, including temporary tenants, in October 2013.
The second largest contributor to losses is the Hyde Park Apartment Portfolio (2.9%). The loan is secured by 951 units within 43 buildings. The latest reported debt service coverage ratio (DSCR) was 0.84x, as of March 30, 2014, with occupancy of 90.3%. The borrower completed $26 million of renovations in 2011, updating kitchens, baths, walls, ceilings and floor coverings, as well as improving common areas. Additionally, the borrower finished addressing several deferred maintenance issues in late 2013 that caused units to be off line. The servicer expects performance to improve in 2014.
The third largest contributor to losses is 100 Technology Center Drive (1%). The loan is collateralized by a 197,000 sf fully vacant office building located in Stoughton, MA. The loan transferred to the special servicer in May 2013 due to imminent default and subsequently became REO in September 2013. The servicer is currently marketing the building for lease.
Rating Outlooks on classes A1-A through A-4 are expected to remain Stable due to sufficient credit enhancement. Assets have been in special servicing for an average of 34 months and the final disposition dates remain uncertain. Continued deterioration of the specially serviced assets may lead to further downgrades, but if progress is made on the REO assets, the outlook for the A-M classes could be revised to stable.
Fitch has downgraded the following classes:
--$425.6 million class A-M to 'BBsf' from 'BBB-sf'; Outlook Negative;
--$50 million class A-MFL to 'BBsf' from 'BBB-sf'; Outlook Negative.
Fitch has affirmed the following classes:
--$43.8 million class A-3 at 'AAAsf'; Outlook Stable;
--$126.3 million class A-3B at 'AAAsf'; Outlook Stable;
--$73.5 million class A-SB at 'AAAsf'; Outlook Stable;
--$1,573 million class A-4 at 'AAAsf'; Outlook Stable;
--$200 million class A-4FL at 'AAAsf'; Outlook Stable;
--$435.8 million class A-1A at 'AAAsf'; Outlook Stable;
--$248.3 million class A-J at 'CCCsf'; RE 50%;
--$150 million class A-JFL at 'CCCsf'; RE 50%;
--Class A-JFX at 'CCCsf'; RE 50%;
--$23.8 million class B at 'CCsf'; RE 0%;
--$71.3 million class C at 'CCsf'; RE 0%;
--$35.7 million class D at 'CCsf'; RE 0%;
--$29.7 million class E at 'Csf'; RE 0%;
--$35.7 million class F at 'Csf'; RE 0%;
--$47.6 million class G at 'Csf'; RE 0%.
--$53.5 million class H at 'Csf'; RE 0%;
--$65.4 million class J at 'Csf'; RE 0%;
--$53.5 million class K at 'Csf'; RE 0%;
--$11.9 million class L at 'Csf'; RE 0%;
--$11.9 million class M at 'Csf'; RE 0%;
--$17.8 million class N at 'Csf'; RE 0%;
--$11.9 million class O at 'Csf'; RE 0%;
--$5.9 million class P at 'Csf'; RE 0%;
--$5.9 million class Q at 'Csf'; RE 0%.
The swap agreement on the class A-JFL notes was recently terminated. The rating on the class A-JFL will be withdrawn upon receipt of the September 2014 trustee report. Please see Fitch's press release titled 'Fitch Rates Class A-JFX of CGCMT 2007-C6' dated Aug. 28, 2014 for further details.
Fitch does not rate class S. Class A-1 and A-2 notes are paid in full. The rating on class X was previously withdrawn.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (Aug. 4, 2014);
--'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