Fitch Downgrades One Class of Banc of America Large Loan, Inc. Re-REMIC 2009-UBER2

Fitch Downgrades One Class of Banc of America Large Loan, Inc. Re-REMIC 2009-UBER2 | Bild: © ad-hoc-news

--$2.8 million class A-4B-9 to 'Asf' from 'AAAsf'; Outlook Stable.

In addition, Fitch affirms the following class:

--$105.8 million class A-4A-A at 'AAAsf'; Outlook Stable.

These classes are collateralized by class A-4 in MSCI 2007-IQ14, a transaction not rated by Fitch. Class A-4 from this transaction serves as collateral for classes A-4A-A, which has approximately 50% credit support, and class A-4B-9, which has approximately 30% credit support. The remaining classes in the Re-REMIC transaction are collateralized by other transactions, and will be reviewed by Fitch in the future.

The downgrade is the result of an increase in Fitch expected losses for the MSCI 2007-IQ14 transaction. Although Fitch does not rate the transaction, it did review the performance of the underlying collateral, including loans in special servicing. The increase in Fitch expected losses is attributed to updated values for the larger specially serviced loans, including an $81 million loan on a property in Garfield Heights, OH which suffers from environmental contamination from a neighboring landfill. Fitch expects the loan may incur greater than 100% loss upon resolution.

The transaction has a remaining principal balance of approximately $4.37 billion. Approximately 30.6% of the loans by balance are in special servicing, including three of the largest four loans. Two specially serviced loans with significant modeled losses were the Beacon Seattle & DC Portfolio (12.5% of the pool) and City View Center (1.9%).

The Beacon Seattle & DC Portfolio is the largest loan in the transaction. The pari passu loan transferred to special servicing in April 2010 for imminent default; however, the loan is currently performing under a modification agreement which included a maturity extension to 2017 and incentives for the borrower to sell the underlying properties to paydown the debt. The loan has paid down 29% from the sale of six of the original 20 properties. Fitch expected losses are based on current performance of the remaining collateral properties.

City View Center is secured by a retail property located in Garfield Heights, OH, approximately eight miles from the Cleveland CBD. The asset transferred to special servicing in November 2008 for imminent default as the property lost several tenants, including a Wal-Mart, due to environmental issues. A receiver was appointed in 2009 and litigation surrounding the environmental issue continues. The special servicer continues to pursue all rights and remedies available which may include a repurchase claim against the originator, Morgan Stanley. Fitch's analysis did not give credit to any successful repurchase claim.

This transaction is a resecuritization of the ownership interest in nine commercial mortgage-backed certificates which total $303,230,000. The transaction consists of two pooled senior re-REMIC bond groups backed by five underlying transactions each, one senior re-REMIC bond backed by one underlying transaction and nine subordinate standalone re-REMIC bonds backed by nine separate underlying transactions.

Credit enhancement for classes A-4A-A, A-4A-B and A-4A-C are approximately 50% and are provided by the underlying bonds and subordinate certificates. The subordinate A-4B-1 through the A-4B-9 classes each have approximately 30% credit enhancement provided by the structural support of the underlying transactions. Losses on any mortgage loan will be allocated first to the lowest rated class of the mortgage loan's respective series. A potential risk posed by the unpooled junior series is that the pooled senior classes may experience losses while other loan-specific junior series classes remain outstanding.

Fitch reviewed the underlying collateral and performed loan level stressed analysis, reflecting cash flow and value declines under the criteria described in 'Surveillance Methodology for U.S. Fixed Rate CMBS' dated Dec. 21, 2011.

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 Methodology for U.S. Fixed-Rate CMBS Transactions' (Dec. 21, 2010);

--'U.S. Commercial Mortgage Re-REMIC Criteria' (March 10, 2011).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=646569

Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=662869

U.S. Commercial Mortgage Re-REMIC Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=609848

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