Fitch Upgrades TIAA 2007-C4; Revises Outlook on 1 Class

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has upgraded three and affirmed 13 classes of commercial mortgage pass-through certificates from TIAA Seasoned Commercial Mortgage Trust, series 2007-C4. Fitch has also revised the Rating Outlook on class E to Stable from Negative. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The upgrades are primarily due to an increase in credit enhancement as a result of 45.2% principal paydown since Fitch's last rating action. Fitch modeled losses of 23.2% of the remaining pool; expected losses on the original pool balance total 4.7%, including losses already incurred to date (1.1%). Fitch has identified eight loans (34%) as Fitch loans of concern (LOC), including three specially serviced assets (27.9%).

As of the August 2015 distribution date, the pool's aggregate principal balance has been reduced by 84.4% to $326.5 million from $2.09 billion at issuance. The transaction has become highly concentrated with only 31 loans remaining in the pool. Currently there are no defeased loans. Interest shortfalls in the amount of $5 million are affecting classes K through T.

The largest contributor to expected losses consists of two pari-passu notes that are secured by two phases of a shopping center in Algonquin, IL (25.7% of the pool, collectively). The loans are cross collateralized and cross defaulted. Phase I was built in 2003 and has 418,451 square feet (sf) of rentable space. It is anchored by Dicks Sporting Goods (16% of GLA) with a lease expiring January 2020. Other large tenants include DSW Shoe Warehouse (5.9%) and Charming Charlie (2.5%). Phase II was built in 2005 and contains 146,339 sf. It is anchored by Ross Dress For Less (21.6%) with a lease expiring January 2022. Both loans defaulted in 2009 and were corrected in 2010; however, the loans returned to special servicing in June 2012 and the special servicer-initiated litigation against the borrower is still ongoing. The servicer reported first-quarter 2015 (1Q15) debt service coverage ratio (DSCR) for Phase I and Phase II were 0.61x and 0.68x, respectively. Per the June 2015 rent roll, Phase I was 86.1% occupied, compared to 97% at issuance; Phase II was 100% occupied, compared to 89.8% at issuance.

The second largest contributor to expected losses is a 132,102 sf office property (2.1%) located in Jacksonville, FL. The property became a real estate owned (REO) asset in October 2012 due to foreclosure. As of July 2015, the property was 77.8% occupied, compared to 78.2% at issuance.

RATING SENSITIVITIES

The Stable Outlooks indicate that Fitch does not foresee positive or negative rating migration until a material economic or asset-level event changes the transaction's overall portfolio-level metrics. The distressed classes (rated below 'B') may be subject to further rating actions as losses are realized.

Fitch has upgraded the following classes as indicated:

--$10.5 million class B to 'AAAsf' from 'AAsf'; Outlook Stable;

--$28.8 million class C to 'Asf' from 'BBBsf'; Outlook Stable;

--$18.3 million class D to 'BBBsf' from 'BBsf'; Outlook Stable.

Fitch has affirmed the following classes and revised Outlooks as indicated:

--$158.9 million class A-J at 'AAAsf'; Outlook Stable;

--$5.2 million class E at 'BBsf'; Outlook to Stable from Negative;

--$15.7 million class F at 'CCCsf'; RE 100%.

--$20.9 million class G at 'CCCsf'; RE 60%;

--$13.1 million class H at 'CCsf'; RE 0%;

--$23.5 million class J at 'Csf'; RE 0%;

--$7.8 million class K at 'Csf'; RE 0%;

--$7.8 million class L at 'Csf'; RE 0%.

--$7.9 million class M at 'Csf'; RE 0%;

--$2.6 million class N at 'Csf'; RE 0%;

--$5.5 million class P at 'Dsf'; RE 0%;

--$0 class Q at 'Dsf'; RE 0%;

--$0 class S at 'Dsf'; RE 0%.

The class A-1, A-2, A-3 and A-1A certificates have paid in full. Fitch does not rate the class T certificates. Fitch previously withdrew the rating on the interest-only class X certificates.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria (pub. 10 Dec 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=812608

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=990310

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=990310

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE '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 MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150902006467/en/

Fitch Ratings
Primary Analyst
Amy Gan
Director
+1-212-908-9143
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations
Sandro Scenga, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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