Fitch Downgrades One Distressed Class from COMM 2006-C8

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has downgraded one and affirmed 16 classes of COMM Mortgage Trust series 2006-C8 commercial mortgage pass-through certificates. In addition, Fitch has revised the Rating Outlooks on class A-M to Positive from Stable. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations are the result of the overall stable pool performance since Fitch's last rating action. Performing loans representing 91.8% of the remaining pool are scheduled to mature within the next seven months, including the 28 defeased loans (33.4%). Fitch expects the majority of these loans will pay off at maturity. However, some loans may have trouble refinancing and could default. Fitch has applied additional stresses in its base case to factor in the refinancing risk. Fitch modeled losses of 13.9% for the remaining pool; expected losses on the original pool balance total 14.8%, including $265.5 million (7% of the original pool balance) in realized losses to date. Fitch has designated 17 loans (14.1%) as Fitch Loans of Concern, which includes five specially serviced assets (7%).

As of the May 2016 distribution date, the pool's aggregate principal balance has been reduced by 43.9% to $2.12 billion from $3.78 billion at issuance. Among the 28 defeased loans, four (21.3%) are among the top 15 loans. Interest shortfalls totaling $30.6 million are currently affecting classes C through S.

The largest contributor to expected losses is a loan (3.6% of the pool) secured by 405,000 square feet (sf) of a 689,601 sf regional mall located in Clovis, CA. The loan was transferred to the special servicing in September 2013 due to payment default and has been real estate owned (REO) since January 2015. As of March 2016, the property was 83% occupied, compared to 87.9% at issuance. The servicer is working to lease up the vacant space and address near-term capital improvements.

The second largest contributor to expected losses is a loan (2.5%) secured by a recreational vehicle resort community (a portfolio of 12 at issuance) located in Saltlick, PA. The one remaining property consists of 885 units. The other 11 properties have previously been released or liquidated as REO assets. The property became REO in December 2015. Based on servicer provided asset valuations, significant losses are expected upon liquidation of the property.

RATING SENSITIVITIES

The Positive Outlook on class A-M indicates that an upgrade is possible if the maturing loans pay off as expected and the recoveries on the specially serviced assets are better than anticipated. In addition, the distressed classes (rated below 'B') may be subject to further downgrades as losses are realized.

DUE DILIGENCE USAGE

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

Fitch has downgraded the following classes:

--$37.8 million class D to 'Csf' from 'CCsf'; RE 0%.

Fitch has affirmed the following classes and revised Rating Outlooks as indicated:

--$830.7 million class A-4 at 'AAAsf'; Outlook Stable;

--$420.4 million class A-1A at 'AAAsf'; Outlook Stable;

--$377.6 million class A-M at 'AAsf'; Outlook to Positive from Stable;

--$302.1 million class A-J at 'CCCsf'; RE 95%;

--$28.3 million class B at 'CCsf'; RE 0%;

--$42.5 million class C at 'CCsf'; RE 0%;

--$23.6 million class E at 'Csf'; RE 0%;

--$28.3 million class F at 'Csf'; RE 0%;

--$27.2 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%;

--$0 class N at 'Dsf'; RE 0%;

--$0 class O at 'Dsf'; RE 0%.

The classes A-1, A-2A, A-2B, A-3 and A-AB have paid in full. Fitch does not rate the class P, Q and S certificates. Fitch previously withdrew the ratings on the interest-only class X-P and X-S certificates.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=873395

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1005515

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1005515

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/20160602006578/en/

Fitch Ratings
Amy Gan
Director
+1-212-908-9143
Fitch Ratings, Inc.
33 White Hall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations
Sandro Scenga
+1-212-908-0278
New York
[email protected]

Source: Fitch Ratings

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