TEXT-S&P lowers ratings on JLOC XXVIII CMBS to 'D (sf)'

Tue Oct 9, 2012 3:26am EDT

Oct 09 -

OVERVIEW

-- JLOC XXVIII is a property sales-type CMBS transaction that Morgan Stanley Japan Securities arranged.

-- The remaining senior specified bond that secures the class D senior trust certificates has been impaired and, as a result, the class D senior trust certificates have also incurred a loss.

-- Harajuku Holding TMK's series 4-2 mezzanine specified bond has also been impaired.

-- We have lowered to 'D (sf)' our ratings on the class D senior trust certificates and on the series 4-2 mezzanine specified bond.

Standard & Poor's Ratings Services today said that it has lowered to 'D (sf)' from 'CCC (sf)' its ratings on the class D senior trust certificates and on Harajuku Holding TMK's series 4-2 floating-rate mezzanine specified bond issued under the JLOC XXVIII transaction (see list below). The class A and B senior trust certificates and Nakano Holding TMK's series 3-2 floating-rate mezzanine specified bond have already fully redeemed, and the class C senior trust certificates also fully redeemed on the payment date in October 2012.

Of the two senior specified bonds that originally backed the senior trust certificates, a single senior specified bond (Harajuku Holding TMK's senior specified bond) remains. Although the sales of all the properties backing Harajuku Holding TMK's senior specified bond and series 4-2 floating-rate mezzanine specified bond have been completed, the outstanding principal on these two specified bonds exceeds the amount of proceeds collected through the property sales. We today downgraded class D and the series 4-2 mezzanine specified bond to 'D (sf)' because we have confirmed that these two classes incurred losses.

JLOC XXVIII is a property sales-type commercial mortgage-backed securities (CMBS) transaction that Morgan Stanley Japan Securities Co. Ltd. arranged. At the outset of the transaction, two senior specified bonds secured the senior trust certificates, and 567 real estate properties backed the senior specified bonds and mezzanine specified bonds.

RELATED CRITERIA AND RESEARCH

"CMBS Global Property Evaluation Methodology," Sept. 5, 2012

"Japanese Structured Finance Scenario And Sensitivity Analysis: The Effects Of Major Macroeconomic Factors," April 6, 2012

"Methodology For Japanese CMBS Loan Analysis," March 12, 2007

RATINGS LOWERED

JLOC XXVIII Senior Trust Certificates

JPY88.9 billion trust certificates due October 2012

Class To From Initial issue amount

D D (sf) CCC (sf) JPY7.2 bil.

JLOC XXVIII Mezzanine Specified Bonds

Harajuku Holding TMK Series 4-2 JPY3.6 billion floating-rate mezzanine specified bond due October 2012

To From Initial issue amount

D (sf) CCC (sf) JPY3.6 bil.

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