NEW YORK--(BUSINESS WIRE)--Fitch Ratings has upgraded one class and affirmed 19 classes of Protective Finance Corporation REMIC commercial mortgage pass-through certificates, series 2007-PL. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The upgrade is due to increased credit enhancement as a result of additional paydown and scheduled loan amortization since Fitch's last rating action.
Fitch modeled losses of 3% of the remaining pool; expected losses on the original pool balance total 2.1%, including $5.3 million (0.5% of the original pool balance) in realized losses to date. Fitch has designated four loans (1.4%) as Fitch Loans of Concern, which includes two specially serviced assets (3.4%).
As of the May 2014 distribution date, the pool's aggregate principal balance has been reduced by 48.3% to $524.8 million from $1.02 billion at issuance. No loans are defeased. Interest shortfalls are currently affecting class S.
The largest specially serviced loan is Coachella Gateway Shopping Center (3%), which is secured by a 206,837 square foot (sf) retail shopping center located in Coachella, CA. As of May 2014, the property is approximately 82% occupied with average rent of $10psf. The property is anchored by Food 4 Less. There is minimal rollover until 2016 when 19% of the leases roll.
Although occupancy at the property has improved, the borrower has notified the special servicer that rents on new leases will be insufficient to carry the debt service once the loan's current interest-only modification expires (in August 2014). Per the special servicer, the borrower is currently exploring refinancing opportunities. Per REIS, as of first quarter-2014 (1Q'14) the Palm Desert submarket vacancy is 17% with asking rent $15 psf.
The largest loan of concern is Stanwood Plaza (1.5%), which is secured by a retail property located in Stanwood, WA. The largest tenant is Quality Food Center whose lease expires in 2023. As of December 2013, the property is 84.4% occupied with a YE 2012, the debt service coverage ratio is 0.90x. An update on property performance has been requested of the master servicer.
RATING SENSITIVITIES
The Rating Outlook on classes A-3 through N remains Stable due to increasing credit enhancement and continued paydown and amortization. Upgrades to the junior classes are not likely due to the smaller class sizes, single tenant exposure and properties located in tertiary markets.
Fitch upgrades the following classes as indicated:
--$5.1 million class B to 'AAAsf' from 'AA+sf'; Outlook Stable.
Fitch affirms the following classes and revises Rating Outlooks as indicated:
--$2.5 million class N at 'B-sf'; Outlook to Stable from Negative.
Fitch also affirms the following classes as indicated:
--$58.5 million class A-3 at 'AAAsf'; Outlook Stable;
--$132.9 million class A-4 at 'AAAsf'; Outlook Stable;
--$33.8 million class A-1A at 'AAAsf'; Outlook Stable;
--$101.6 million class A-M at 'AAAsf'; Outlook Stable;
--$102.9 million class A-J at 'AAAsf'; Outlook Stable;
--$8.9 million class C at 'AAsf'; Outlook Stable;
--$6.4 million class D at 'AA-sf'; Outlook Stable;
--$7.6 million class E at 'A+sf'; Outlook Stable;
--$6.4 million class F at 'Asf'; Outlook Stable;
--$8.9 million class G at 'A-sf'; Outlook Stable;
--$7.6 million class H at 'BBB+sf'; Outlook Stable;
--$7.6 million class J at 'BBBsf'; Outlook Stable;
--$8.9 million class K at 'BBsf'; Outlook Stable;
--$5.1 million class L at 'Bsf'; Outlook Stable;
--$2.5 million class M at 'Bsf'; Outlook Stable;
--$2.5 million class O at 'CCCsf'; RE 100%;
--$3.8 million class P at 'CCCsf'; RE 100%;
--$2.5 million class Q at 'CCCsf'; RE 100%.
The class A-1 and A-2 certificates have paid in full. Fitch does not rate the class S certificates. Fitch previously withdrew the rating on the interest-only class IO certificates.
Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in Fitch's Dec. 11, 2013 report, , cited below and available at 'www.fitchratings.com' under the following headers:
Structured Finance >> CMBS >> Criteria Reports
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (May 20, 2014);
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 11, 2013).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748821
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724961
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=833220
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