Nov 20 - Fitch Ratings has downgraded six and affirmed 17 classes of Merrill
Lynch Mortgage Trust (MLMT), series 2007-C1 (MLMT 2007-C1), commercial
pass-through certificates. A detailed list of rating actions follows at the end
of this press release.
The downgrades reflect both an increase in modeled losses on the
specially-serviced loans, as well as continued underperformance of many of the
larger loans not in special servicing since Fitch's December 2011 rating action.
Fitch modeled losses of 21.8% of the remaining pool; modeled losses are 21.2% of
the original pool.
The Negative Outlooks on classes A-4 and A-M reflect the possibility for further
performance deterioration of the underlying pool. Fitch has designated 88 loans
(55.1% of the pool balance) as Fitch Loans of Concern, which includes 20
specially-serviced loans (36.6%). The Negative Outlook on the
multifamily-directed class A-1A reflects the possibility for continued
underperformance of the multifamily collateral in the pool. The multifamily
collateral comprises 30.4% of the pool and includes the two largest loans
(21.6%) which are both in special servicing. The loans have recently been
modified into A/B notes. Fitch modeled the B-notes to be full losses.
As of the October 2012 distribution date, the pool's aggregate principal balance
has been reduced by approximately $746 million (18.4%) to $3.304 billion from
$4.050 billion at issuance; of which $608 million (15%) were paydowns and $138
million (3.4%) were realized losses. No loans have defeased since issuance.
Interest shortfalls totaling $23.3 million are currently affecting classes A-J
The largest two contributors to Fitch modeled losses are the Empirian Portfolio
Pool 1 (11.6% of the pool) and Pool 3 (10%) loans. Both loans were transferred
to special servicing in November 2010 due to payment default. Pool 1 is secured
by 78 multifamily properties (7,964 units) located across eight states. Pool 3
is secured by 79 multifamily properties (6,864 units) located across eight
states. The properties within the two portfolios are generally class B and C
complexes, many of which were constructed in the 1980s and lack common
amenities. All of the properties suffer significant deferred maintenance.
During the fourth quarter of 2011, both loans were modified and bifurcated into
an A and a B note. As of November, the occupancy for Pool 1 and Pool 3 was 84.2%
and 84.6%, respectively, representing a decline from the 93% and 90.9% reported
at issuance. Net-operating income (NOI) for the portfolios have continued to
decline as expected. For the first 11 months of 2012, NOI has approximately
declined by greater than 10% for Pool 1 and greater than 20% for Pool 3 when
compared to year-end 2010.
The third largest contributor to Fitch modeled losses is a real estate owned
(REO) asset (3.5%) consisting of 566,908 square feet (sf) of a 1.28 million sf
regional mall located in Duluth, GA. The loan was transferred to special
servicing in October 2011 for imminent payment default. As of March 2012,
occupancy was 52%, down significantly from 81% at issuance. The property is
currently being marketed for sale with other retail assets. The most recent
appraisal value indicates significant losses upon liquidation.
Fitch has downgraded the following classes:
--$405 million class A-M to 'B-sf' from 'BBsf'; Outlook Negative;
--$86.1 million class B to 'Csf' from 'CCCsf'; 'RE 0%';
--$40.5 million class C to 'Csf' from 'CCsf'; 'RE 0%';
--$45.6 million class D to 'Csf' from 'CCsf'; 'RE 0%';
--$45.6 million class E to 'Csf' from 'CCsf'; 'RE 0%';
--$50.6 million class F to 'Csf' from 'CCsf'; 'RE 0%'.
In addition, Fitch has affirmed and revised Rating Outlooks to the following
classes, as indicated:
--$1.14 billion class A-1A at 'AAAsf'; Outlook to Negative from Stable;
--$60.7 million class A-2 at 'AAAsf'; Outlook Stable;
--$40.6 million class A-2FL at 'AAAsf'; Outlook Stable;
--$322.2 million class A-3 at 'AAAsf'; Outlook Stable;
--$130 million class A-3FL at 'AAAsf'; Outlook Stable;
--$86.4 million class A-SB at 'AAAsf'; Outlook Stable;
--$442.2 million class A-4 at 'AAAsf'; Outlook Negative;
--$134.1 million class AJ at 'CCCsf'; RE 0%';
--$200 million class AJ-FL at 'CCCsf'; RE 0%';
--$40.5 million class G at 'Csf'; 'RE 0%';
--$29.4 million class H at 'Dsf'; 'RE 0%';
--$0 class J at 'Dsf'; 'RE 0%';
--$0 class K at 'Dsf'; 'RE 0%';
--$0 class L at 'Dsf'; 'RE 0%';
--$0 class M at 'Dsf'; 'RE 0%';
--$0 class N at 'Dsf'; 'RE 0%';
--$0 class P at 'Dsf'; 'RE 0%'.
Class A-1 has paid in full. Fitch does not rate class Q, which has been reduced
to zero due to realized losses. Fitch withdrew the ratings of the interest-only
class X. (For additional information, see 'Fitch Revises Practice for Rating IO
& Pre-Payment Related Structured Finance Securities', dated June 23, 2010.)
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