Fitch Upgrades 5 Classes of BACM 2007-3

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has upgraded five classes and affirmed 17 classes of Banc of America Commercial Mortgage Trust (BACM) commercial mortgage pass-through certificates series 2007-3. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The upgrades are a result of increased credit enhancement due to additional paydown since Fitch's last rating action. Fitch modeled losses of 7.5% of the remaining pool; expected losses on the original pool balance total 9.8%, including $172.3 million (4.9% of the original pool balance) in realized losses to date. Fitch has designated 16 loans (12.1%) as Fitch Loans of Concern, which includes six specially serviced assets (2%).

As of the August 2015 distribution date, the pool's aggregate principal balance has been reduced by 34.5% to $2.3 billion from $3.52 billion at issuance. Per the servicer reporting, three loans (0.5% of the pool) are defeased. Interest shortfalls are currently affecting classes C through S.

The largest contributor to expected losses is the Pacifica Tower loan (7.2% of the pool), which is secured by a 326,384 square foot (sf) office tower that is part of the Plaza at La Jolla office development, a six-building property that features 825,000 sf of office space spread over 17 acres located in the Golden Triangle/University Town Center (UTC) submarket of San Diego, CA. The largest tenants are DLA Piper LLP (14%) with lease expiration in June 2020, Wells Fargo Bank (12%), lease expiration in November 2018, and CB Richard Ellis, Inc. (10%), lease expiration August 2016. Although, occupancy remains stable, the property is very highly leveraged at $509 per square foot (psf). The most recent servicer-reported debt service coverage ratio (DSCR) as of March 2015 is 0.79x with occupancy of 96.9% and average rental rates at $37.16 psf. Per REIS, as of the second quarter of 2015, the La Jolla submarket vacancy is 11.8% with average asking rent $37.47 psf.

The next largest contributor to expected losses is the North Park Business Park Portfolio 3 asset (0.7%), which is two office buildings (with an aggregate rentable area of 170,384 sf) located within the North Park Business Park in Omaha, NE. Building 4A and 4B (contiguous structures which share a common lobby) consist of 98,955 sf and Building 5 consists of 71,429 sf. The property has been in special servicing since 2012 and is currently real estate owned (REO). The property's occupancy increased to 65.8% from 24% due to the signing of a new lease with Chicago Title Insurance for 71,429 sf beginning March 2015. The special servicer is in the process of retaining Colliers to handle property management and leasing. The most recent servicer-reported DSCR as of June 2015 is 0.37x.

The third largest contributor to expected losses is the Stonecrest Marketplace loan (1.5%), which is secured by a 264,610 sf retail property located in Lithonia, GA, an eastern suburb of Atlanta. The largest tenants include Big Lots, Babies R Us, Ross Stores, Marshalls, and DSW. As of June 2015, the property's occupancy remains stable at 91.9%. There is approximately 5% rollover in 2016 and 20% in 2017. The most recent servicer-reported DSCR as of year-end 2014 is 1.11x.

RATING SENSITIVITIES

Rating Outlooks on classes A-4 through A-J remain Stable due to increasing credit enhancement and continued paydown. Ratings on the distressed classes 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 upgrades the following classes and assigns Rating Outlooks as indicated:

-- $116.6 million class A-M to 'AAsf' from 'Asf'; Outlook Stable;

-- $100 million class A-MF to 'AAsf' from 'Asf'; Outlook Stable;

-- $135 million class A-MFL to 'AAsf' from 'Asf'; Outlook Stable;

-- $241.7 million class A-J to 'BBsf' from 'B-sf'; Outlook Stable;

-- $35.2 million class B to 'Bsf' from 'CCCsf'; Outlook Stable assigned.

Fitch affirmed the following classes and assigns or revises REs as indicated:

-- $949.2 million class A-4 at 'AAAsf'; Outlook Stable;

-- $50 million class A-5 at 'AAAsf'; Outlook Stable;

-- $422.6 million class A-1A at 'AAAsf'; Outlook Stable;

-- $48.3 million class C at 'CCCsf'; RE 100%;

-- $26.4 million class D at 'CCCsf'; RE 100%;

-- $26.4 million class E at 'CCsf'; RE 100%;

-- $35.2 million class F at 'CCsf'; RE 80%.

-- $30.8 million class G at 'Csf'; RE 0%;

-- $48.3 million class H at 'Csf'; RE 0%;

-- $35.2 million class J at 'Csf'; RE 0%;

-- $3.6 million 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%;

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

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

The class A-1, A-2, A-2FL, A-3 and A-AB certificates have paid in full. Fitch does not rate the class S certificates. Fitch previously withdrew the rating on the interest-only class XW certificates.

Additional information is available at www.fitchratings.com.

Applicable Criteria

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

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria (pub. 10 Dec 2014)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=812608

Additional Disclosures

Dodd-Frank Rating Information Disclosure Formhttps://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=990715

Solicitation Statushttps://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=990715

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/20150911005818/en/

Fitch Ratings, Inc.
Primary Analyst
Lisa Cook, +1-212-908-0665
Director
33 Whitehall St.
New York, NY 10004
or
Committee Chairperson
Mary MacNeill, 1-212-908-0785
Managing Director
or
Media Relations, New York
Sandro Scenga, +1-212-908-0278
[email protected]

Source: Fitch Ratings

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