CHICAGO - (Business Wire) Fitch Ratings places six classes of Wachovia Bank Commercial Mortgage Trust (WBCMT), series 2007-WHALE 8, commercial mortgage pass-through certificates on Rating Watch Negative as follows:
-- $10,138,000 class J 'BBB+';
-- $5,197,000 class K 'BBB';
-- 12,503,000 class L 'BBB-';
-- $53,020,858 class LXR-1 'BBB+';
-- $70,759,454 class LXR-2 'BBB-';
-- $3,300,000 class FSN-1 rated 'BB+'.
In addition, Fitch affirms and assigns Rating Outlooks to the following classes as follows:
-- $776,288,203 class A-1 'AAA'; Outlook Stable;
-- $345, 361,000 class A-2 'AAA'; Outlook Stable;
-- Interest only classes X-1A and X-1B 'AAA'; Outlook Stable;
-- $61,593,000 class B 'AA+'; Outlook Stable;
-- $47,506,000 class C 'AA+'; Outlook Stable;
-- $71,159,000 class D 'AA'; Outlook Stable;
-- $46,604,000 class E 'AA-'; Outlook Stable;
-- $46,604,000 class F 'A+'; Outlook Stable;
-- $46,605,000 class G 'A'; Outlook Stable;
-- $30,448,000 class H 'A-'; Outlook Stable;
-- $2,452,364 class AP-1 'BBB'; Outlook Stable;
-- $6,359,036 class AP-2 'BBB-'; Outlook Stable;
-- $3,800,000 class LP-1 'BBB'; Outlook Stable;
-- $9,100,000 class LP-2 'BBB-'; Outlook Stable;
-- $2,100,000 class LP-3 'BB+'; Outlook Stable;
-- $3,800,000 class HH-1 'BBB-'; Outlook Stable;
-- $3,600,000 class MH-1 'BBB-'; Outlook Negative.
Fitch does not rate the non-pooled AP-3, AP-4, HH-2, FSN-2 and MH-2 classes. Class FA has paid in full.
The Rating Watch Negative placements for classes J, K, L, LXR-1, and LXR-2 are due to concern surrounding the stabilization of LXR Hospitality Pool (63.9%), the largest loan in the pool, based on the expected impact of the current market conditions on hotel performance, as well as future casino revenue.
The Rating Watch Negative placement for class FSN-1 is a result of the transfer to special servicing of the seventh largest loan in the pool (3.5%), Four Seasons Nevis. The property suffered damage and flooding from Hurricane Omar on Oct. 15, 2008 and is currently closed. The loan had a scheduled maturity date of Oct. 9, 2008; however, it transferred to special servicing on Oct. 23, 2008 after failing to meet the extension conditions in light of the hotel's closure. An estimate of the damage is not currently known. Fitch will monitor the damage reports and insurance claims as they become available.
The rating affirmations are the result of the remaining assets performing as expected at issuance. Class MH-1 has been assigned a Negative Outlook due to slower than expected stabilization for the Mondrian Hotel than Fitch assumed at issuance. The Rating Outlooks reflect the likely direction of any rating changes over the next one to two years.
As of the October 2008 distribution, the transaction's aggregate certificate balance has decreased 14.8% to $1.678 billion from $1.968 billion at issuance. The nine remaining loans in the transaction are interest-only, and the 14.8% pay down is due to the fourth largest loan, 717 Fifth Avenue paying in full, and the release of collateral from three loans, LXR Hospitality, Ashford Hospitality and Southeast Multifamily Pool.
Currently, hotel assets collateralize seven loans or 95% of the pool, and a portfolio of multifamily properties and a golf course represent 3% and 2% of the pool, respectively. All pooled senior participations included in the trust are shadow rated investment grade. The non-pooled participation interest of seven loans in the trust, LXR Hospitality Pool, Ashford Hospitality Pool, Longhouse Hospitality Pool, Hudson Hotel, Four Seasons Nevis, and Mondrian Hotel, are structured as rake classes.
LXR Hospitality Portfolio, the largest loan, has paid down principal due to release of collateral. The loan is currently collateralized by a portfolio of 12 hotels representing 4,742 rooms located in Florida, California, Arizona, New York, Puerto Rico and Jamaica. The unadjusted servicer provided combined occupancy for the trailing twelve months (TTM) ending July 2008 was 63.5% while the average daily rate (ADR) was $217.04 and RevPAR was $137.76. This is comparable to Fitch expectations. However, the three properties located in Puerto Rico derive a portion of their revenue from casino income and have suffered significant declines in casino revenue. Fitch will review details regarding the casino revenue declines. Downgrades are likely if current lower revenues are expected to continue. In addition, Fitch will monitor the performance of the portfolio in light of expected stress on the hotel industry due to current market conditions. The loan has a May 9, 2009 maturity date with three one-year extension options.
Longhouse Portfolio, the second largest loan (10%), is secured by 42 extended-stay hotels representing 5,600 rooms located in 11 states. The August 2008 servicer provided portfolio occupancy was 69.4%, ADR was $45 and RevPAR was $31, comparable to Fitch expectations. The loan has a June 9, 2009 maturity with three one-year extension options.
The third largest loan, Hudson Hotel, is collateralized by an 805-room hotel located in New York, NY. The July 2008 servicer provided portfolio occupancy was 89.9%, ADR was $270 and RevPAR was $243, compared with 87.1%, $262, and $229, respectively, at issuance. The loan has a July 12, 2010 maturity with one 15-month extension option.
The remaining balance of the scheduled maturities is 82.7% in 2009 and 13.8% in 2010, and all have extension options, except Troon North Golf (2%) which matures in 2010.
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Fitch Ratings
Elizabeth Elser, +1-312-606-2319 (Chicago)
Britt Johnson, +1-312-606-2341 (Chicago)
Sandro Scenga, +1-212-908-0278
(Media Relations, New York)
sandro.scenga@fitchratings.com
