Fitch Ratings has downgraded five classes of WaMu Commercial Mortgage Securities Trust 2006-SL1, small balance commercial mortgage pass-through certificates. A detailed list of rating actions follows at the end of this release.
The downgrades reflect an increase in Fitch expected losses across the pool. Fitch modeled losses of 9.3% of the remaining pool. Fitch has designated 115 loans (31%) of the pool as Fitch Loans of Concern, which includes 20 specially serviced loans (5%).
As of the June 2012 distribution date, the pool's certificate balance has paid down 25.8% to $379.4 million from $511.4 million at issuance. There are 362 of the original 443 loans remaining in the transaction. There are currently 20 specially serviced loans (5%) in the deal. The average loan size for the remaining loans is $1 million. To date, the transaction has incurred $18.1 million in losses, representing 3.5% of the original transaction.
The largest contributor to loss (1.2%) is secured by a 73,678 square foot industrial warehouse property located in Santa Ana, CA. The decline in performance is a result of increased expenses and decreased expense reimbursements. The master servicer has contacted the borrower for updates on occupancy, asking rents, marketing efforts, and their plans to increase property cash flow.
The second largest contributor to loss (1%) is currently specially serviced and in foreclosure. The loan is secured by a multifamily property consisting of 169 units located in Chicago, IL. The special servicer has rejected a discounted payoff offer submitted by the borrower and legal counsel is drafting a motion for summary judgment. The most recent servicer reported occupancy was 84.6% as of January 2011.
The third largest contributor to loss (0.3%) is secured by a retail property located in Bronx, NY which is owner occupied. The decline in performance is due to decreased rental rates combined with increased expenses. The most recent reported occupancy as of December 2010 is 100%. The master servicer has contacted the borrower for updates on property performance.
Fitch downgrades, and provides Recovery Estimates for the following classes:
--$14.7 million class C to 'CCC' from 'B-'; RE 75%;
--$10.2 million
class D to 'CC' from 'CCC'; RE 0%;
--$7 million class E to 'CC'
from 'CCC'; RE 0%';
--$3.8 million class F to 'C' from 'CC'; RE 0%;
--$7.7
million class G to 'C' from 'CC'; RE 0%.
Fitch also affirms, and revises Outlooks on the following classes as indicated:
--$51.2 million class A at 'A'; Outlook to Negative from Stable;
--$273.5
million class A-1A at 'A'; Outlook to Negative from Stable;
--$10.2
million class B at 'BB'; Outlook to Negative from Stable.
Classes H, J, K, L and M remain at 'D'; RE 0% due to principal losses incurred. Class N is not rated by Fitch. Fitch had previously withdrawn the rating of the interest-only class X.
For additional information on the withdrawal of the rating on the interest-only class, see 'Fitch Revises Practice for Rating IO & Pre-Payment Related Structured Finance Securities', dated June 23, 2010).
For additional information on the withdrawal of the ratings on the interest only classes, see 'Fitch Revises Practice for Rating IO & Pre-Payment Related Structured Finance Securities', dated June 23, 2010.
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, 2011).
Applicable Criteria and Related Research:
Global Structured Finance
Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679923
Surveillance
Methodology for U.S. Fixed-Rate CMBS Transactions
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=662869
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Contacts:
Fitch Ratings
Lisa Cook, +1-212-908-0665
Director
Fitch,
Inc.
One State Street Plaza
New York, NY 10004
or
Committee
Chairperson:
Mary MacNeill, +1-212-908-0785
Managing Director
or
Media
Relations:
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com
