Fitch Ratings has affirmed Banc of America Large Loan, Inc commercial mortgage pass-through certificates, series 2006-BIX1 due to stable performance of the remaining loans. The revision of the class E outlook to positive reflects continued paydown and increased credit enhancement.
The rating actions reflect Fitch's base case loss expectation of 9.2%. Fitch's performance expectation incorporates prospective views regarding commercial real estate values and cash flow declines. A detailed list of rating actions follows at the end of this release.
Under Fitch's updated analysis, 100% of the pool is modeled to default in the base case stress scenario, defined as the 'B' stress, as all the remaining loans are currently in special servicing. In this scenario, the modeled average cash flow decline is 10% from trailing 12 month March 2012 financials, from appraisal values or Fitch estimates of value. In its review, Fitch analyzed servicer-reported operating statements and rent rolls, updated property valuations, and recent lease and sales comparisons. Fitch estimates the average recoveries on the pooled notes will be approximately 90.8% in the base case.
Although the transaction has seen increased credit enhancement due to loan payoffs, the pool has become increasingly concentrated. The transaction is collateralized by three loans, two of which are secured by office (82%) and one by retail (18%). All of the final maturity dates including all extension options and modified extension or forbearance periods are in 2012 or 2013.
Fitch expects losses on one of the remaining loans, the Ballantyne Village (18%).
The Ballantyne Village interest-only loan is collateralized by a 166,041 sf retail center located in Charlotte, NC, approximately 14 miles south of downtown Charlotte, in the neighborhood known as Ballantyne. It is located in the Outer Southeast retail submarket of Charlotte. The property was built in 2005 and the subject loan refinanced a construction loan. The collateral does not include a 480-space parking deck; however, an easement agreement provides access and use of the parking deck.
The loan transferred to special servicing in July 2009 due to imminent default. The special servicer and the borrower completed negotiations and executed a forbearance agreement in March 2011. The agreement included cash management, strict payment waterfall compliance, and required the borrower to contribute cash under certain conditions. The borrower pays interest on $14 million of principal; interest accrues on the total principal balance of the loan and is deferred. The borrower has been given the opportunity to release the collateral by paying 100% of the fair market value based on a predetermined valuation procedure which involved the special servicer's participation. A final value was reached in March 2012 and the borrower has until Oct. 1, 2012 to pay off the loan or surrender the property to the special servicer.
The largest loan in the transaction is the CarrAmerica National Pool (62.6%). The loan was originally secured by fee, leasehold, and cash flow interests in a portfolio of 73 office properties located throughout the U.S. Following releases of collateral, the portfolio currently consists of 24 properties totaling 5.8 million sf.
The loan transferred to special servicing in February 2011 for imminent maturity default, with the borrower seeking an extension. The loan was modified with terms that include an extension to August 2013, $40 million in paydown to the A notes, additional paydown after the release of one property, scheduled amortization during the extended maturity period and all fees paid by the borrower.
The remaining loan in the transaction is the JER Denver Office Portoflio (19.4%). The loan was originally collateralized by six office properties totaling over 900,000 sf located in Greenwood Village and Englewood, CO, within the Denver MSA. Two properties have been released, resulting in paydown of approximately $12 million. The remaining four properties contain 721,734 sf and are located in Greenwood Village, CO.
The loan transferred to special servicing in May 2011 after the borrower requested an extension and modification due to uncertainty in refinancing the debt.
Fitch affirms the ratings and revises the Outlooks of the following pooled certificates as indicated:
--$6.8 million class D at 'AAAsf'; Outlook Stable;
--$28.3 million class E at 'AAsf'; Outlook revised to Positive from Stable;
--$28.3 million class F at 'A+sf'; Outlook Stable;
--$28.3 million class G at 'Asf'; Outlook Stable;
--$28.3 million class H at 'A-sf'; Outlook Stable;
--$11.3 million class J at 'BBBsf' Outlook Stable;
--$11.8 million class K at 'Bsf'; Outlook Stable.
Fitch affirms the rating and Recovery Estimate (RE) of following pooled certificate:
--$18.9 million class L at 'Dsf'; RE 0%.
Fitch affirms the ratings and revises the Outlooks the following nonpooled certificates:
--$4 million class J-CP at 'BBB+sf'; Outlook Stable;
--$5.9 million class K-CP at 'BBBsf'; Outlook Stable;
--$11.5 million class L-CP at 'BBB-sf'; Outlook Stable.
Classes X-1B, X-2, X-3, X-4 and X-5 were previously withdrawn. Classes A-1 through C, X-1A, J-CA, K-CA, L-CA, M-MC and L-SC have paid in full.
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' (Aug. 4, 2011);
--'Surveillance Criteria for U.S. CREL CDOs and CMBS Large Loan Floating-Rate Transactions' (Dec. 1, 2011).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679923
Surveillance Criteria for U.S. CREL CDOs and CMBS Large Loan Floating-Rate Transactions
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=657734
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