2008-07-23 22:31:01 -
- Fitch Ratings removes from Rating Watch Negative and downgrades 7 classes of J.P. Morgan Chase Commercial Mortgage Securities Corp., pass-through certificates, Series 2007-FL1, as follows:
--$11.9 million class RS-1 to 'BB+ from 'AA-';
--$12.8 million class RS-2 to 'BB' from 'A+';
--$15.6 million class RS-3 to 'BB-' from 'A';
--$11.1 million class RS-4 to 'B+'
from 'A-';
--$15.4 million class RS-5 to 'B' from 'BBB+';
--$13.2 million class RS-6 to 'B-' from 'BBB';
--$7.6 million class RS-7 to 'B-' from 'BBB-';
In addition, Fitch affirms the following classes:
--$873.6 million class A-1 at 'AAA';
--$243.1 million class A-2 at 'AAA'
--Interest-only class X-1 at 'AAA';
--Interest-only class X-2 at 'AAA';
--$53.7 million class B at 'AA+';
--$38.4 million class C at 'AA';
--$36.4 million class D at 'AA-'
--$44.1 million class E at 'A+',
--$30.7 million class F at 'A';
--$30.7 million class G at 'A-;
--$42.2 million class H at 'BBB+';
--$38.4 million class J at 'BBB';
--$34.5 million class K at 'BBB-';
--$38.4 million class L at 'BBB-';
The downgrade of the Resorts International rake classes is as a result of Fitch's review of updated financial information, in addition to an analysis of the overall Atlantic City gaming market fundamentals and performance.
As of year-end (YE) 2007, the Resorts International portfolio's net cash flow declined approximately 32% from Fitch's stressed net cash flow at issuance. The decrease in cash flow is attributed to multiple factors: increased competition, a smoking ban introduced throughout the entire Atlantic City gaming market, and the overall negative performance of the gaming industry due to general macro-economic conditions throughout the U.S. For the first three months ended March 31, 2008, the Atlantic City gaming market recorded a 17.7% decrease in gross operating profit from the same period in 2007. Fitch does not expect the cash flow to reach the same levels as at issuance.
Resorts International, the fourth largest loan, consists of a $120.2 million senior trust component and $87.7 million in subordinate rake (RS) classes. The loan is secured by one casino/hotel property located in Atlantic City, NJ and two casino/hotel properties located in Tunica, MS. The total debt on the portfolio, including the trust portion, totals $506.3 million. In September 2007, the Resorts East Chicago property was released from the portfolio, paying down the senior trust component by approximately 47%. The loan matures on November 9, 2008 and has three one-year extension options.
The affirmations are due to expected performance and continued stabilization of the remaining loans since issuance. As of the July 2008 remittance report, the transaction has paid down by approximately 12.3% (including the subordinate rake classes). All of the original 22 loans remain in the trust. In addition to the Resorts International loan, the PHOV Portfolio (11.3%) has exercised a partial release, and as a result has paid down by 17.6%. There are no specially serviced loans, and all loans are current. All of the senior pooled notes that remain in the transaction maintain investment grade shadow ratings.
The transaction consists of loans collateralized by hotel properties (72.1%), retail (19.6%), office (5.6%) multifamily (1.6%) and industrial/warehouse (1.1%).
The largest loan is secured by the Walden Galleria (15.4% of the senior trust components), a mall located in Buffalo, NY. The property completed the addition of the 300,000 sf ThEATery in the fall of 2007, adding national retailers such as Barnes & Noble, Urban Outfitters and the Cheesecake Factory. As of YE 2007, the mall was approximately 97% occupied. The sponsor is Pyramid. The loan matures on May 9, 2009 and has three one-year extension options.
The second largest loan is secured by the Marriott Waikiki (12.9%), a full service hotel located along Kalakaua Avenue, across from Waikiki Beach in Honolulu, HI. The property began a $28 million renovation in January 2008 that is expected to be completed in the fall of 2008. The sponsor, Whitehall, has provided a renovation guaranty. As of April 2008, the trailing twelve month occupancy, average daily rate (ADR) and revenue per available room (RevPAR) were 83.6%, $193 and $161, respectively. The loan matures in May 9, 2009, and has three one-year extension options.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Fitch Ratings
Jeff Watzke, +1-312-606-2358
Britt Johnson, +1-312-606-2341 (Chicago)
Media Relations:
Sandro Scenga, +1-212-908-0278 (New York)
