A 2006 commercial mortgage-backed security deal collateralized by two very different properties in Hawaii and New York, respectively, has ended up affected by stressors that have increased its Fitch loss expectations and caused the rating agency to downgrade one investment grade class.
Fitch said it downgraded the speculative grade $6.8 million Class K of pass-through deal in Morgan Stanley Capital I Inc. series 2006-XLF to Bsf from BBsf, but affirmed the ratings of several other classes, after increasing its base case loss expectation to 13.2% from 7.2%.
A Hawaiian resort hotel that secures an interest-only loan representing 85.3% of the collateral pool has been through some distress, including damage from recent excessive rainfall. The distress has included an ownership change and modification followed by a significant performance decline since issuance that leaves it in a situation where current operations do not cover its debt. However, the loan remains current on modified terms.
The Bronx affordable housing property, which has an amended final maturity this July, is converting to individually owned cooperative units. The loan is being paid down as units are sold. The loan had a “significant paydown” that released the property back in 2009. As of April, the building had 681 unsold units, down from 701 at the time of Fitch’s last review.
