Dec 13 - Fitch Ratings has downgraded six classes and affirmed 15 classes of
Merrill Lynch Mortgage Trust (MLMT) commercial mortgage pass-through
certificates series 2006-C1 due to an increase in expected losses on loans in
special servicing. A detailed list of rating actions follows at the end of this
Fitch modeled losses of 10.4% of the remaining pool; expected losses on the
original pool balance total 10.0%, including losses already incurred. The pool
has experienced $38.8 million (1.6% of the original pool balance) in realized
losses to date.
Fitch has designated 70 loans (28.4%) as Fitch Loans of Concern, which includes
23 specially serviced assets (11.9%).
The specially serviced loans consists of 14 loans (7.2%) as real estate owned
(REO), four loans (1.7%) in foreclosure, four loans (2.3%) that are 60 to 90
days delinquent and one loan (1%) that is current.
As of the November 2012 distribution date, the pool's aggregate principal
balance has been reduced by 18.7% to $2.02 billion from $2.49 billion at
issuance. Per the servicer reporting, two loans (0.5% of the pool) have defeased
since issuance. Interest shortfalls are currently affecting classes E through Q.
The largest contributor to expected losses (2.7% of pool balance) is a 298,865
square foot (sf) REO asset consisting of two three-story office buildings
located in Scottsdale, AZ. The asset transferred to special servicing in October
2009 when the largest tenant (50% of the total net rentable area )
exercised its early termination option and vacated. As of October 2012, physical
occupancy for the building was 35% while economic occupancy was 52%. An
additional 13% of leases are scheduled to expire in 2013. The special servicer
continues to work to renew existing tenants and stabilize the asset.
The next largest contributor to expected losses (1.3%) is a 360-key independent
hotel located in Tampa, FL. The facility was master-leased for use as corporate
housing for training events and conferences. The loan transferred to special
servicing in November 2010 when the master lease expired and was not renewed.
The special servicer is in discussion with the borrower on a modification while
The third largest contributor to expected losses (1.1%) is a 356,061 sf REO
office building located in downtown Cincinnati, OH. The loan transferred to
special servicing in June 2008 for imminent default and became real estate owned
in March 2010. As of December 2012, occupancy for the building was 72% with a
debt service coverage ratio (DSCR) of 0.34x. The special servicer continues
leasing efforts to improve occupancy.
Fitch downgrades the following classes, assigns Recovery Estimates (REs) and
revises Rating Outlooks as indicated:
--$217.9 million class A-J to 'BBsf' from 'BBB-sf', Outlook to Negative from
--$56 million class B to 'CCCsf' from 'Bsf', RE 95%;
--$28 million class C to 'CCsf' from 'CCCsf', RE 0%.
--$31.1 million class D to 'Csf' from 'CCCsf', RE 0%;
--$18.7 million class E to 'Csf' from 'CCCsf', RE 0%;
--$28 million class F to 'Csf' from 'CCsf', RE 0%.
Fitch affirms the following classes as indicated:
--$126.4 million class A-2 at 'AAAsf', Outlook Stable;
--$134 million class A-3 at 'AAAsf', Outlook Stable;
--$25 million class A-3B at 'AAAsf', Outlook Stable;
--$79.4 million class A-SB at 'AAAsf', Outlook Stable;
--$753.4 million class A-4 at 'AAAsf', Outlook Stable;
--$197.3 million class A-1A at 'AAAsf', Outlook Stable;
--$249 million class A-M at 'AAAsf', Outlook Stable;
--$21.8 million class G at 'Csf', RE 0%;
--$24.9 million class H at 'Csf', RE 0%;
--$6.2 million class J at 'Csf', RE 0%;
--$9.3 million class K at 'Csf', RE 0%;
--$6.2 million class L at 'Csf', RE 0%;
--$6.2 million class M at 'Csf', RE 0%;
--$4.7 million class N at 'Dsf', RE 0%;
--$0 class P at 'Dsf', RE 0%.
Fitch does not rate the class Q certificates. Class A-1 has been paid in full.
Fitch previously withdrew the rating on the interest-only class X certificates.
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 Related Research:
--'Global Structured Finance Rating Criteria' (June 6, 2012);
--'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions' (Dec. 21,
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions