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Fitch Downgrades & Assigns Distressed Recovery Ratings to 2 Classes of Mezz Cap 2004-C1
NEW YORK-(Business Wire)-May 6, 2008 - Fitch Ratings has downgraded and assigned distressed recovery (DR) ratings to Mezz Cap's commercial mortgage pass-through certificates, series 2004-C1, as follows:
—$4.4 million class H to 'B-/DR1' from 'B';
—$0.5 million class J to 'CCC/DR5' from 'B-'.
In addition, Fitch has affirmed the following classes:
—$28.4 million class A at 'AAA';
—$2.8 million class B at 'AA+';
—$2.3 million class C at 'AA-';
—$2.8 million class D at 'A-';
—$1.5 million class E at 'BBB+';
—$1.6 million class F at 'BBB+';
—Interest-only class X at 'AAA';
—$1.1 million class G at 'BB+'.
Fitch does not rate the $2.8 million class K certificates.
The downgrades and assignment of distressed recovery ratings are the result of Fitch's expected losses on specially serviced assets. As of the April 2008 remittance report, the pool's aggregate certificate balance has decreased 4.6% to $48.2 million from $50.5 million at issuance. Twenty-one loans (30.0%) have been defeased.
The mortgage loans consist of two notes - the A note, or senior component, which is not included in this trust's mortgage assets, and the B note. The B notes in this pool consist of subordinate interests in the first mortgage loans. All loans are secured by traditional commercial real estate property types and are subject to standard intercreditor agreements that limit the rights and remedies of the B note holder in the event of default and upon refinancing. Due to their subordinate positions, B notes which default and incur a loss are typically 100% non-recoverable.
Four assets (4.0%) are currently in special servicing with losses expected. The non-rated class K is sufficient to absorb Fitch's expected losses; however, if additional loans become specially serviced class J will likely be impacted.
The largest (1.6%) and second largest (1.1%) specially serviced assets are multifamily properties owned by the same borrower in Indianapolis, IN, and are more than 90 days delinquent. No recovery is expected on the respective B-note portions included in the trust.
The third specially serviced asset (0.7%) is a multifamily property in Arlington, TX and is currently real estate owned. A recent appraisal value indicates a complete loss of the B-note portion included in the trust.
The smallest specially serviced asset (0.6%) is a multifamily property located in Euless, TX and is more than 90 days delinquent. The special servicer is currently marketing the property. A recent appraisal value indicates a complete loss of the B-note portion included in the trust.
Fitch's Distressed Recovery (DR) ratings are designed to estimate recoveries on a forward-looking basis while taking into account the time value of money.
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.
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