Fitch Affirms MLFT 2006-1

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed the two remaining classes of Merrill Lynch Floating Trust pass-through certificates, series 2006-1. The affirmations of the distressed ratings are due to continued credit risk associated with the outstanding loan.

KEY RATING DRIVERS

The affirmations are based on updated valuation as of July 2015, which is in line with recent historical values. As of the October 2015 remittance, the pool has paid down by 98% since issuance. The one remaining loan, The Royal Holiday Portfolio, is secured by six full-service hotels in Mexico. The properties are located within five distinct tourist markets, including Cancun, Cozumel, Ixtapa, Acapulco, and San Jose del Cabo.

Recently, the powerful Hurricane Patricia made landfall on the west coast of Mexico near Cuixmala, Jalisco. Fitch confirmed with the servicer that the collateral properties were not directly affected by the hurricane.

The loan has been in special servicing since February 2010 after the borrower amended certain operating leases without lender approval. The collateral's international location complicates the workout, as both the U.S. and Mexican legal systems are involved in the proceedings. Litigation surrounding the loan workout has led to a long resolution horizon.

RATING SENSITIVITIES

Based on recent value estimates, the ratings are expected to remain stable. Fitch does not foresee a positive or negative rating migration until there is progression in the litigation. Additionally, the Royal Holiday Portfolio workout is complicated by its international location (Mexico), as the resolution involves deliberation through the legal systems of both the U.S. and Mexico.

DUE DILIGENCE USAGE

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

Fitch affirms the following classes:

--$17.9 million class L at 'CCCsf'; RE 100%;

--$47.1 million class M at 'Dsf'; RE 90%.

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

Applicable Criteria

Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions (pub. 27 Aug 2015)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=870009

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

Additional Disclosures

Dodd-Frank Rating Information Disclosure Formhttps://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=993094

Solicitation Statushttps://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=993094

Endorsement Policyhttps://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/20151029006261/en/

Fitch Ratings
Primary Analyst:
Chris Bushart, +1-212-908-0606
Senior Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson:
Mary MacNeill, +1-212-908-0785
Managing Director
or
Media Relations:
Sandro Scenga, +1-212-908-0278
New York
[email protected]

Source: Fitch Ratings

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