NEW YORK - (Business Wire) (This release replaces the one released on Nov. 14, 2008)
Fitch Ratings downgrades and maintains the Rating Watch Negative on the following non-pooled classes of CS First Boston Mortgage Securities Corp., pass-through certificates, series 2007-TFL2 as:
--$8.9 million class BSL-A to 'BB' from 'AA-'; Rating Watch Negative;
--$9.0 million class BSL-B to 'BB' from 'A+'; Rating Watch Negative;
--$8.9 million class BSL-C to 'BB' from 'A'; Rating Watch Negative;
--$8.9 million class BSL-D to 'BB' from 'A-'; Rating Watch Negative;
--$7.9 million class BSL-E to 'B' from 'BBB+'; Rating Watch Negative;
--$9.9 million class BSL-F to 'B' from 'BBB'; Rating Watch Negative.
In addition, Fitch affirms the following classes:
--$521.3 million class A-1 at 'AAA'; Outlook Stable;
--$100 million class A-2 at 'AAA'; Outlook Stable;
--$207 million class A-3 at 'AAA'; Outlook Stable;
--Interest-only class A-X-1 at 'AAA'; Outlook Stable;
--Interest-only class A-X-2 at 'AAA'; Outlook Stable;
--$45.7 million class B at 'AA+'; Outlook Stable;
--$42.6 million class C at 'AA'; Outlook Stable;
--$33.5 million class D at 'AA-'; Outlook Stable;
--$36.6 million class E at 'A+'; Outlook Stable;
--$36.5 million class F at 'A'; Outlook Stable;
--$33.5 million class G at 'A-'; Outlook Stable;
--$39.6 million class H at 'BBB+'; Outlook Negative;
--$36.6 million class J at 'BBB'; Outlook Negative;
--$39.6 million class K from 'BBB-'; Outlook Negative;
--$33.5 million class L at 'BB-'; Outlook Negative.
Fitch also affirms the following non-pooled components of the related trust assets:
--$90.7 million class CSP-A1 at 'AAA'; Outlook Stable;
--$33.6 million class CSP-A2 at 'AAA'; Outlook Stable;
--Interest-only class CSP-AX at 'AAA'; Outlook Stable;
--$10.6 million class CSP-B at 'AA+'; Outlook Stable;
--$11.5 million class CSP-C at 'AA'; Outlook Stable;
--$9.9 million class CSP-D at 'AA-'; Outlook Stable;
--$10 million class CSP-E at 'A+': Outlook Stable;
--$9.7 million class CSP-F at 'A'; Outlook Stable;
--$19.9 million class CSP-G at 'BBB+'; Outlook Stable;
--$9.9 million class CSP-H at 'BBB'; Outlook Stable;
--$15.9 million class CSP-J at 'BBB-'; Outlook Stable; and
--$18 million class CSP-K at 'BB+'; Outlook Stable.
The downgrades of the non-pooled classes reflect the lowering of the shadow ratings of Biscayne Landing. Biscayne Landing (10.9%) was transferred to special servicing for default in January 2008 as the borrower failed to meet the mandatory prepayment of $17 million. An additional payment of $95 million is coming due on Dec. 31, 2008. Fitch considers it unlikely that this payment will be made as scheduled. Any resolution costs or potential losses could be incurred by one or more of the BSL rake classes, which are collateralized by the non-pooled senior portions of the Biscayne Landing loan and are subordinate to the pooled senior portion. The Biscayne Landing loan is secured by a ground lease on the largest undeveloped parcel of urban land in South Florida, consisting of 188 acres in North Miami. While the borrower's original development plan revolved around a master planned community, it has recently gained permission by the city to expand the potential uses for the land to include a greater portion of commercial or hotel space. The Biscayne Landing loan matures on May 9, 2009 and has two one-year extension options.
The affirmations are due to expected performance and continued stabilization of the remaining loans since issuance. The Rating Outlooks reflect the likely direction of rating changes over the next one to two years. Negative Outlooks reflect loans that are behind on their stabilization plans or where economic pressures may make execution of the original business plans less feasible.
As of the October 2008 distribution date, the transaction's aggregate principal balance has decreased 0.69%. All of the original eight loans remain in the trust. Of the loans scheduled to mature in 2008, all have extension options ranging from two to three years.
The largest loan in the pool, Planet Hollywood Resort and Casino (30.7% of the pool) is a hotel and casino in Las Vegas, NV, previously operated as the Aladdin. The property is in the midst of a $178 million renovation and re-development project that includes substantial improvements to the facade, casino, restaurants, and guestrooms. Renovations are nearing completion, with the final 1,076 guestrooms on schedule to be completed prior to the 2008 holiday season. Fitch will closely monitor the stabilization of this asset following the conclusion of renovations. The loan was recently extended through 2009 and there are two remaining one-year extension options.
The Resorts Atlantic City (11.7%), which was downgraded to below investment grade in August, continues to be a concern. The Resorts Atlantic City is a 942-room casino/hotel located in Atlantic City, NJ. Total debt on the loan is $360 million, which consists of a $175 million senior component which is held in the trust and a $185 million junior component held outside the trust. The property's weak performance is attributed to multiple factors: increased competition, a smoking ban introduced throughout the entire Atlantic City gaming market, and the overall negative performance of the gaming industry due to general macro-economic conditions throughout the U.S. Fitch does not expect the cash flow to reach the same levels as at issuance.
The transaction consists of loans collateralized by hotel properties (49.1%), office (24%), healthcare (16%), and land (10.9%). All of the loans in the pool mature within the next year but have at least one remaining extension option.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 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 Ratings
Linda Hammel, 212-908-0303, New York
Britt Johnson, 312-606-2341, Chicago
or
Media Relations:
Sandro Scenga, 212-908-0278, New York
Email: sandro.scenga@fitchratings.com
