CHICAGO - (Business Wire) Fitch Ratings places three classes of CD Commercial Mortgage Trust, series 2007-CD4, commercial mortgage pass-through certificates on Rating Watch Negative as follows:
--$74,248,000 class K at 'BBB-';
--$24,749,000 class L at 'BB+';
--$16,499,000 class M at 'BB';
In addition, Fitch maintains the rating watch placement as follows:
--$16,500,000 class N at 'BB-'/Rating Watch Negative;
Fitch also affirms and assigns Rating Outlooks to the following classes:
--$76,365,660 class A-1 at 'AAA'; Outlook Stable;
--$100,000,000 class A-2A at 'AAA'; Outlook Stable;
--$1,066,703,000 class A-2B at 'AAA'; Outlook Stable;
--$464,222,000 class A-3 at 'AAA'; Outlook Stable;
--$161,959,000 class A-SB at 'AAA'; Outlook Stable;
--$1,737,121,000 class A-4 at 'AAA'; Outlook Stable;
--$998,756,000 class A-1A at 'AAA'; Outlook Stable;
--$594,982,000 class A-MFX at 'AAA'; Outlook Stable;
--$65,000,000 class A-MFL at 'AAA'; Outlook Stable;
--$585,733,000 class A-J at 'AAA'; Outlook Stable;
--Interest-only class XP at 'AAA' Outlook Stable;
--Interest-only class XC at 'AAA'; Outlook Stable;
--Interest-only class XW at 'AAA'; Outlook Stable;
--$41,249,000 class B at 'AA+'; Outlook Stable;
--$90,748,000 class C at 'AA'; Outlook Stable;
--$57,748,000 class D at 'AA-'; Outlook Stable;
--$41,249,000 class E at 'A+'; Outlook Stable;
--$49,498,000 class F at 'A'; Outlook Stable;
--$65,999,000 class G at 'A-'; Outlook Negative;
--$74,248,000 class H at 'BBB+'; Outlook Negative;
--$65,998,000 class J at 'BBB'; Outlook Negative;
--$40,500,000 class WFC-X at 'BBB+'; Outlook Stable;
--$7,700,000 class WFC-1 at 'BBB+'; Outlook Stable;
--$8,700,000 class WFC-2 at 'BBB'; Outlook Stable;
--$24,100,000 class WFC-3 at 'BBB-'; Outlook Stable.
The $16,500,000 class O, $8,249,000 class P, $16,500,000 class Q, and $74,248,279 class S are not rated by Fitch.
The additional Rating Watch Negative placements are due to the likely decline in credit enhancement resulting from Fitch assumed losses on the largest specially serviced loan, Riverton Apartments. The Riverton loan is the seventh largest in the transaction (3.4% of the deal). The loan transferred to the special servicer in August 2008 for imminent default following the depletion of the debt service reserve. The borrower kept the loan current as of September, but the loan is now in monetary default as of October 2008. A final workout strategy and valuation remain unknown at this time, however given current market conditions and slower than anticipated conversion of units from stabilized to market rental rates, significant losses are possible if the loan is disposed.
The affirmations are the result of overall stable performance of the pool and minimal paydown since issuance. The Rating Outlooks reflect the likely direction of any rating changes over the next one to two years. As of the September 2008 distribution date, the pool's certificate balance has decreased 0.3% to $6.58 billion from $6.60 billion at issuance.
There is currently one other loan (0.4%) in special servicing that is secured by a multifamily property in Garland, Texas. The loan transferred in October 2007 due to default and borrower bankruptcy; the borrower is MBS Cos. The loan is current and expected to return to the master servicer shortly.
Three loans maintain their investment grade shadow ratings: Nine West 57th Street (6.1%), Ala Moana Portfolio (6.1%), and One World Financial Center (4.7%).
Nine West 57th Street is a 1.6 million square foot (sf) office building located in midtown New York City. The servicer-reported occupancy as of March 2008 was 84%. The loan is interest-only with a coupon of 5.17% and a maturity date in 2012. The largest tenant, Bank of America (40% of the net rentable area), is expected to vacate Oct. 31, 2008 at their lease expiration. Per the servicer, the borrower has not responded to inquiries regarding the leasing status of the space. However, given the strong location in the Plaza District submarket of Manhattan, the high quality of the asset, and the below market rent of approximately half of Bank of America's space per Torto Wheaton Research, the loan maintains its investment grade shadow rating. Fitch will monitor the status of the re-leasing of anticipated vacant space.
The Ala Moana Portfolio is secured by the fee interest in a 1.9 million sf retail and office development in Honolulu, HI. Ala Moana Center is one of the most productive retail assets in the nation, with sales for in-line tenants consistently exceeding $1,000 per square foot (psf). The retail portion of the collateral is occupied by nearly 275 tenants, while the office portion is occupied by 184 tenants. The mall is sponsored and operated by General Growth Properties (GGP). Occupancy as of June 2008 was 96%, inline with 95.8% at issuance. The loan is interest-only with a coupon of 5.52% and a maturity date in 2011.
One World Financial Center is located in downtown New York City and consists of 1.6 million sf. Occupancy has remained stable at 96.5% as of March 2008, compared to issuance of 98%. The loan is interest-only with a coupon rate of 5.83% and maturity date in 2017.
There are 22 Fitch loans of concern, 8.9% of the pool, including the two specially serviced loans. The largest non-specially serviced loan of concern (1.7%) is collateralized by a 493-room hotel in Henderson, NV. The servicer-reported year-end 2007 and year-to-date 2008 debt service coverage ratios are less than 1.0 times (x) at 0.78x and 0.67x, respectively. Occupancy has declined, mostly as a result of lower group sales business.
There are no scheduled maturities in 2008, 2009 or 2010. Interest-only loans represent 60% of the pool, including the top 10 loans (39%) in the transaction.
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, Chicago
Elizabeth Elser, +1-312-606-2319
Britt Johnson, +1-312-606-2341
Sandro Scenga, +1-212-908-0278
(Media Relations, New York)
sandro.scenga@fitchratings.com
