TEXT - Fitch cuts 2 classes of JP Morgan 2007-FL1
Nov 19 - Fitch Ratings has downgraded two classes from the pooled portion of J.P. Morgan Chase Commercial Mortgage Securities Corp. Series 2007-1. A detailed list of rating actions follows at the end of this release. The downgrade of class A-2 to 'A' from 'AA' is based on interest shortfalls affecting the class. According to Fitch's criteria, ratings at 'AAA' and 'AA' should not incur interest shortfalls. The interest shortfalls began in October 2012, primarily due to the claw back of interest advances to the Resort International loan. Class K has been downgraded to 'D' from 'C' as a result of incurred losses. The Negative Rating Outlooks reflect the possibility of further negative credit migration of the underlying collateral. Fitch affirmed the remainder of the pooled transaction and the non-pooled junior component certificates were also affirmed based on Fitch's loss expectations on the Resorts International loan. Fitch's performance expectation incorporates prospective views regarding commercial real estate values and cash flow declines. The rating action reflects Fitch's base case loss expectation of 11.5%. Under Fitch's updated analysis, 100% of the pooled and non-pooled components are modeled to default in the base case stress scenario, defined as the 'B' stress. Fitch estimates that average recoveries on the pooled loans will be approximately 88.5% in the base case. In its review, Fitch analyzed servicer reported operating statements, STR reports and rent rolls, updated property valuations, and recent lease and sales comparisons. As of the November 2012 distribution report, the transaction is collateralized by eight loans, including six that are secured by hotels (75.3%), one by casino (18.7%), and one by office (6%). All eight loans are currently in special servicing, including two (24.5%) real estate owned (REO) assets, four (57.7%) in delinquency and two (17.8%) in forbearance. All eight remaining loans have been identified as Fitch Loans of Concern. Fitch's analysis resulted in loss expectations for three A-notes, and each of the B-note non-pooled components in the 'B' stress scenario. The three pooled contributors to losses in the 'B' stress scenario are: PHOV Portfolio (19.3%), Resorts International (13.5%) and Sofitel Minneapolis (2.8%). The PHOV Portfolio loan is secured by 11 full-service hotels (following the previous release of the Hilton Rockville), located in FL, CA, SC, IL and NJ. Flags include Hilton, Doubletree, Courtyard by Marriott, Sheraton and two non-flagged hotels. The loan was transferred to special servicing in January 2012 due to imminent maturity default. The loan has passed its final maturity date in May 2012 and the special servicer is working with the borrower for a loan modification. Four of the 11 properties were severely impacted by Hurricane Katrina and Wilma in 2005, with the hotels coming back on line in late 2006 and mid 2007. While year-end (YE) 2011 net operating income improved significantly over YE 2010 and YE 2009, it remains below issuance expectations. For YE 2011, the revenue per available room (RevPAR) was $80.26, compared to $74.3 at YE 2010, $67.58 at YE 2009 and $87.58 at issuance. The Resorts International loan was originally collateralized by four casino/hotel properties located in Atlantic City, NJ, East Chicago, IN, Robinsonville, MS and Tunica, MS. The Resorts East Chicago property was released from the portfolio in September 2007, paying down the senior trust component by approximately 47%. The loan was foreclosed in November 2011 and the Atlantic City Hilton property was released to the borrower due to negative property value. The remaining two properties became REO assets. The loan secures two additional non-trust pari passu A notes of $32.4 million each, an $87.7 million non-pooled senior participation included in the transaction and a $233 million junior participation held outside the trust. The current appraisal value obtained by the special servicer indicated losses upon liquidation of the assets. The Sofitel Minneapolis loan is secured by a 282 room Sofitel Hotel in Bloomington, MN. The loan transferred to the special servicer in February 2012 due to payment default. The loan matured in July 2012. Borrower indicated that occupancy is insufficient to meet debt obligation. The borrower reported September 2012 trailing 12 month (TTM) occupancy, ADR and RevPar are 65.2%, $113.22, and $73.85, respectively. The special servicer is pursuing foreclosure and the appointment of a receiver. The current appraisal value obtained by the special servicer indicated losses upon liquidation of the assets. Fitch downgrades the following classes and revises Rating Outlooks as indicated: --$243.1 million class A-2 to 'Asf' from 'AAsf'; Outlook to Negative from Stable; --$15 million class K to 'Dsf' from 'Csf'; RE0%. Fitch affirms the following classes and revises Rating Outlooks as indicated: --$111.8 million class A-1 at 'AAAsf'; Outlook Stable; --$45.4 million class B at 'Asf'; Outlook to Negative from Stable; --$32.4 million class C at 'Asf'; Outlook Negative; --$30.8 million class D at 'BBBsf'; Outlook Negative; --$37.3 million class E at 'Bsf'; Outlook Negative --$26 million class F at 'CCCsf'; RE100%'; --$26 million class G at 'CCsf'; RE40%; --$35.7 million class H at 'Csf'; RE0%; --$32.5 million class J at 'Csf'; RE0%; --$0 million class L at 'Dsf'; RE0%; --$11.9 million class RS-1 at 'Csf'; RE0%; --$12.8 million class RS-2 at 'Csf'; RE0%; --$15.6 million class RS-3 at 'Csf'; RE0%; --$11.1 million class RS-4 at 'Csf'; RE0%; --$15.4 million class RS-5 at 'Csf'; RE0%; --$13.2 million class RS-6 at 'Csf'; RE0%; --$7.6 million class RS-7 at 'Csf'; RE0%. The interest-only class X-1 has paid in full. Fitch withdrew its rating on the interest-only class X-2 at prior review.
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