Fitch Affirms Sovereign Commercial Mortgage Securities Trust 2007-C1

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has affirmed 10 classes of Sovereign Commercial Mortgage Securities Trust commercial mortgage pass-through certificates series 2007-C1.

KEY RATING DRIVERS

Fitch modeled losses of 27.3% of the remaining pool; expected losses on the original pool balance total 3.9%, including $24.5 million (2.4% of the pool) in realized losses to date. Fitch has designated 16 Fitch Loans of Concern (71%), which includes four specially serviced assets (31.6%).

As of the February 2015 distribution date, the pool's aggregate balance has been reduced by 94.7% to $53.8 million from $1.0 billion at issuance. Since Fitch's last rating action, the pool balance has been reduced by $25.1 million (39%). Interest shortfalls are currently affecting classes F through N.

The largest loan in the pool (22.3% of the pool) is secured by a 106,981 square foot (sf) office property located in Dublin, OH. The loan transferred to special servicing in January 2014 for maturity default. The Borrower was unable to secure a refinance at maturity due to the near term lease expiration of the sole tenant. The special servicer accepted a workout proposal from the borrower that includes a two year extension of the maturity date. The rationale for the extension is to provide the borrower time to negotiate a lease extension with the single tenant and secure refinancing. The loan is current and is being returned to the master servicer as a corrected mortgage loan.

RATING SENSITIVITIES

The loans in this transaction do not have the same features as typical commercial mortgage conduit loans originated for securitization. Additionally, the loans lack some of the typical structural features and reporting requirements seen in CMBS transactions. Therefore, Fitch applied additional stresses, including adjustments of operating income and cap rates. Fitch modeled losses are based on actual performance or expected changes in performance. The ratings reflect the potential for adverse selection and higher than modeled losses on distressed and highly leveraged assets, as this could rapidly deteriorate the credit enhancement of the subordinate classes.

Upgrades to class C are unlikely given the increasing pool concentration, the potential for adverse selection, and the high percentage of Fitch loans of concern. Rating changes to class D are possible depending on the performance of the largest loan in the pool and resolution of the single tenant rollover risk. Downgrades are possible if expected losses are greater than expected.

Fitch affirms the following classes as indicated and updates or revises REs as indicated:

--$13.7 million class C at 'BBsf'; Outlook Stable;

--$20.3 million class D at 'CCCsf'; RE 100%;

--$10.1 million class E at 'CCsf;, RE 40%;

--$7.6 million class F at 'Csf'; RE 0%;

--$2.1 million 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 M at 'Dsf'; RE 0%.

The fully depleted classes J, K, L and M remain at 'Dsf', RE 0% due to realized losses.

The class A-1, A-2, A1-A, A-J, and B certificates have paid in full. Fitch does not rate the class N certificates. Fitch previously withdrew the rating on the interest-only class X certificates.

Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 10, 2014 report, 'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria', which is available at 'www.fitchratings.com' under the following headers:

Structured Finance >> CMBS >> Criteria Reports

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

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (Aug 4, 2014);

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

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

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

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria

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

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=981520

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
Primary Analyst
Valerie Jayson
Associate Director
+1-312-368-3116
Fitch Ratings, Inc.
70 W Madison Street
Chicago, IL 60602
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
Email: [email protected]

Source: Fitch Ratings

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