Fitch Affirms Distressed Ratings of Petra 2007-1

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed at 'Csf' the remaining six classes of Petra CRE CDO 2007-1 (Petra 2007-1). A detailed list of rating actions follows at the end of this release.

Fitch is considering withdrawing the ratings on this transaction due to the lack of relevancy to the agency's coverage combined with commercial reasons. The notes are severely under collateralized. As reflected in the notes' current ratings at 'Csf', default at legal maturity or earlier is inevitable.

While Fitch believes that investors are no longer interested in the agency's coverage of this transaction, the agency will allow investors the opportunity to request the continuing coverage. Investors are encouraged to contact the analysts indicated at the bottom of this press release within 30 calendar days. At the end of that period, Fitch will evaluate any responses and will make a final determination with respect to the withdrawal.

KEY RATING DRIVERS

The CDO is significantly under collateralized with liabilities exceeding collateral by over $300 million. Classes F and below have negative credit enhancement. Since the last rating action, class D has paid off in full and Class E has received 30% pay down from the partial pay off of four assets.

Fitch's actions reflect both the severely under collateralized notes as well as concern over the CDO's ability to continue to make timely interest payments to class E. Only three loan interests remain in the highly concentrated pool, including two that are no longer backed by any remaining collateral and thus have no further recovery expected. None to minimal further principal pay down is expected from the only other asset remaining, a $6.3 million defaulted preferred equity position on the LXR Hotel Portfolio. The collateral now includes only four hotels from an original 13 property luxury hotel portfolio. Recoveries on the loan's senior debt from property sales have been better than anticipated.

Since the July 2011 payment date, interest proceeds have, generally, been insufficient to pay the interest due on the timely classes; the interest due on these classes has been paid from principal proceeds. The senior most class E is now a timely interest pay class and Fitch is concerned about the CDO's ability to continue to make timely interest payments to the class as there are no performing loans remaining in the pool.

RATING SENSITIVITIES

All classes are subject to further downgrade to 'Dsf' should classes default at legal maturity or earlier.

Fitch has affirmed the following classes:

--$15.2 million class E at 'Csf'; RE 5%;

--$36.7 million class F at 'Csf'; RE 0%;

--$22.8 million class G at 'Csf'; RE 0%;

--$30.6 million class H at 'Csf'; RE 0%;

--$54.5 million class J at 'Csf'; RE 0%

--$47.5 million class K at 'Csf'; RE 0%.

Class A-1 through D have paid in full. Fitch does not rate the preferred shares.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Surveillance Criteria for U.S. CREL CDOs' (November 2014);

--'Global Rating Criteria for Structured Finance CDOs' (July 2014);

--'Global Structured Finance Rating Criteria' (August 2014).

Applicable Criteria and Related Research:

Surveillance Criteria for U.S. CREL CDOs

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=811268

Global Rating Criteria for Structured Finance CDOs

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=751136

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=982218

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.

Fitch Ratings
Stacey McGovern
Director
+1-212-908-0722
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, New York, +1-212-908-0278
[email protected]

Source: Fitch Ratings

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