TEXT-Fitch downgrades three classes of BACM 2006-3
Nov 12 - Fitch Ratings has downgraded three classes of Banc of America Commercial Mortgage Inc., series 2006-3 commercial mortgage pass-through certificates. A detailed list of rating actions follows at the end of this press release. The downgrades are due to an increase in Fitch expected losses, primarily from the specially serviced loans. Fitch modeled losses of 11.6% of the remaining pool; expected losses of the original pool are at 16.1%, including losses already incurred to date. Fitch has designated 22 loans (23.2%) as Fitch Loans of Concern, including 10 specially serviced loans (10.3 %). As of the October 2012 distribution date, the pool's aggregate principal balance has reduced by 18.1% to $1.61 billion from $1.96 billion at issuance. Interest shortfalls are affecting classes B through P with cumulative unpaid interest totaling $19.8 million. The largest contributor to Fitch modeled losses (5%) is a 377,000 square foot (sf) class A single-tenant office building located in Parsippany, NJ. Cendant, the single tenant at the property, has signed a lease at another property and will be vacating the entire building upon its October 2013 lease expiration date. In November 2011, the Borrower requested a transition of the asset and transfer of the deed to the Lender. The Deed-in-Lieu was executed in July 2012 and the property has since become a real estate owned (REO) asset. The second largest contributor to Fitch modeled losses (6.3%) is secured by 573,370 sf of a 796,162-sf regional mall located in Sioux City, IA. The mall is shadow anchored by Sears and JC Penney as neither of which are part of the collateral. Second quarter 2012 (2Q'12) occupancy dropped to 85% from 93% at YE2012 due to tenants vacating upon lease expirations. The servicer reported 2Q'12 debt service coverage ratio (DSCR) was 1.1x, compared to 1.31x at issuance. The third largest contributor to Fitch modeled losses (4.1%) is secured by a 345-room hotel located in Phoenix, AZ, approximately 1.5 miles from the Phoenix International Airport. The property faces strong market competition and has been underperforming. Trailing 12-month (TTM) 1Q'12 DSCR was 0.85x, compared to 0.84x at YE2011 and 0.80x at YE2010. DSCR at issuance was 1.44x. The Rating Outlook on the class A-M remains Negative reflecting several highly leveraged loans; nine of the top 15 loans have Fitch loan-to-value () ratios over 90%. In addition, several of these loans have upcoming lease rollovers, which remains a concern. Fitch has downgraded the following classes: --$196.5 million class A-M to 'Asf' from 'AAsf', Outlook Negative; --$152.3 million class A-J to 'CCsf' from 'CCCsf'', RE 50%; --$41.8 million class B to'Csf' from 'CCsf', RE 0%. Fitch has affirmed the following classes: --$41 million class A-3 at 'AAAsf', Outlook Stable; --$1.01 billion class A-4 at 'AAAsf', Outlook Stable; --$96.6 million class A-1A at 'AAAsf', Outlook Stable; --$19.7 million class C at 'Csf', RE 0%; --$31.9 million class D at 'Csf', RE 0%; --$17.2 million class E at 'Csf', RE 0%; --$0.8million class F at 'Dsf'; RE 0%. Classes G, H, J, K, L and M have been reduced to zero due to realized losses and remain at 'Dsf', RE 0%. Classes A-1 and A-2 have paid in full. Fitch does not rate classes N, O or P. Fitch has withdrawn the rating of the interest only class XW at prior review. Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 21, 2011 report, 'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions', which is available at 'www.fitchratings.com' under the following headers: Structured Finance >> CMBS >> Criteria Reports Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings. Applicable Criteria and
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