Fitch Affirms 18 Classes of ML-CFC 2007-5

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed 18 classes of ML-CFC Commercial Mortgage Trust commercial mortgage pass-through certificates, series 2007-5. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations and Rating Outlooks reflect stable performance of the pool and continued pay down since the last rating action. Fitch modeled losses of 15.9% of the remaining pool; expected losses on the original pool balance total 18.6%, including $300 million (6.8% of the original pool balance) in realized losses to date. Fitch has designated 59 loans (41.7% of the pool) as Fitch Loans of Concern, which includes 13 specially serviced assets (30.4% of the pool).

As of the September 2015 distribution date, the pool's aggregate principal balance has been reduced by 25.6% to $3.31 billion from $4.44 billion at issuance. Per the servicer reporting, 14 loans (3.3% of the pool) are defeased and closing is pending for the defeasance of the second largest loan, Tower 45 (5.1% of the pool). There are currently 233 loans remaining in the pool with the top 10 loans accounting for 45%; the largest loan represents 24.2% of the pool and is specially serviced. Remaining maturities are concentrated in fourth quarter 2016 (4Q16; 43.2% of the pool) and 1Q17 (51.6%). Interest shortfalls are currently affecting classes AJ through Q.

The largest contributor to expected losses remains the Peter Cooper Village/Stuyvesant Town (PCV/ST) asset (24.2% of the pool), a 56-building multi-family complex with 11,227 units located on the east side of Manhattan in New York City. The loan transferred to special servicing in November 2009. Subsequently, in October 2012 PCV/ST suffered damage from Hurricane Sandy; property restoration efforts have been completed. The special servicer continues to pursue the remaining claim amounts from the insurance providers and anticipates a resolution in the near term.

On June 3, 2014, the trust received title to the property via deed-in-lieu of foreclosure. On July 3, 2014, certain mezzanine lenders who had purchased their positions filed a complaint alleging that the deed-in-lieu breached the terms of the intercreditor agreement, among other claims. These mezzanine lenders are pursuing damages from the special servicer as Senior Lender. The special servicer filed an initial motion to dismiss on Aug. 18, 2014 and a motion to dismiss a second amended complaint on March 9, 2015. Status is pending regarding the motion to dismiss, but a final ruling is expected in the near term. Any potential sale of the property cannot occur until this litigation is resolved; therefore, timing of a sale remains uncertain.

In November 2012, the special servicer (CWCapital) announced a settlement to The Roberts Litigation to address historical overcharges and future rents for over 4,300 units. Final approval for the settlement was reached and implementation is now complete.

An updated 2015 appraisal and an updated operating statement are still pending, therefore, Fitch continues to model conservative losses. Property performance is stable with 97% occupancy as of August 2015.

The next largest contributor to expected losses is the specially-serviced HSA Memphis Industrial Portfolio loan (1.9% of the pool), which was originally secured by 15 industrial/flex/office buildings with nearly 1.6 million square feet (sf) disbursed across three industrial parks in Memphis, TN. The loan transferred to special servicing in September 2010 due to imminent monetary default. Foreclosure occurred in October 2011 and subject is currently real estate owned (REO). To date, a total of 10 properties have been sold: In late 2013 one building was sold, in early 2014 five properties were sold, and in late 2014 four properties were sold. Currently, the remaining five properties total roughly 352 thousand square feet and the portfolio is 19% occupied as of July 2015.

RATING SENSITIVITIES

Rating Outlooks on classes A-4, A-4FL, and A-1A are expected to remain stable as it is anticipated that credit enhancement will increase due to scheduled pay down from amortization and loan pay-offs at maturity. Outlooks on classes AM and AM-FL have been revised to Stable from Negative to reflect progress in the workout of the PCV/ST loan and pending defeasance of the second largest loan, Tower 45. The distressed classes are subject to downgrades should losses increase above expectations on the remaining specially serviced loans and Fitch loans of concern. Rating upgrades are possible with a positive resolution of PCV/ST.

DUE DILIGENCE USAGE

No third party due diligence was provided or reviewed in relation to this rating action.

Fitch has affirmed the following ratings as indicated:

--$992.3 million class A-4 at 'AAAsf', Outlook Stable;

--$223 million class A-4FL at 'AAAsf', Outlook Stable;

--$1.1 billion class A-1A at 'AAAsf', Outlook Stable;

--$341.7 million class AM at 'BBsf', Outlook to Stable from Negative;

--$100 million class AM-FL at 'BBsf', Outlook to Stable from Negative;

--$211.5 million class AJ at 'CCCsf', RE 25%;

--$175 million class AJ-FL at 'CCCsf', RE 25%;

--$77.3 million class B at 'Csf', RE 0%;

--$33.1 million class C at 'Csf', RE 0%;

--$77.3 million class D at 'Csf', RE 0%;

--$9.2 million class E at 'Dsf', RE 0%;

--$0 class F at 'Dsf', RE 0%;

--$0 class G at 'Dsf', RE 0%;

--$0 class H at 'Dsf', RE 0%;

--$0 class J at 'Dsf', RE 0%;

--$0 class K at 'Dsf', RE 0%;

--$0 class L at 'Dsf', RE 0%;

--$0 class N at 'Dsf', RE 0%.

The class A-1, A-2, A-2FL, A-2FX, A-3, and A-SB certificates have paid in full. Fitch does not rate the class M, P and Q 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=991349

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=991349

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/20150925005516/en/

Fitch Ratings
Primary Analyst
Martin Nunnally, +1-212-908-0871
Associate Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill, +1-212-908-0785
Managing Director
or
Media Relations
Sandro Scenga, New York, +1-212-908-0278
[email protected]

Source: Fitch Ratings

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