July 2, 2012 / 8:56 PM / 5 years ago

TEXT-Fitch cuts 4 classes of MLMT 2004-MKB1

July 2 - Fitch Ratings has downgraded four classes of Merrill Lynch Mortgage
Trust (MLMT) 2004-MKB1 commercial mortgage pass-through certificates. A detailed
list of rating actions follows at the end of this press release.

The downgrades reflect an increase in expected losses across the pool since
Fitch's last review of the transaction. Fitch modeled losses of 4.12% of the
remaining pool. Total expected losses based on the original pool size are 2.43%,
which also reflects 0.72% in losses already incurred to date. Fitch has
designated nine loans (21.7% or the pool balance) as Fitch Loans of Concern,
which include two specially serviced loans (3.8%). Three of the Fitch Loans of
Concern (12.5%) are within the transaction's top 15 loans by unpaid principal
balance.

As of the June 2012 distribution date, the pool's aggregate principal balance
has reduced by 58.58% (including 0.72% of realized losses) to $406 million from
$980 million at issuance. There are seven defeased loans (26.58%). Interest
shortfalls are affecting classes P and Q.

The largest loan in special servicing is secured by 104,169 square foot (sf)
office property in Columbus, OH (2.05% of the pool). The property has
experienced cash flow issues due to increased operating expenses as well as
recent occupancy declines. The June 2012 rent roll reported occupancy at 59%,
compared to servicer reported occupancy of 85% at year end (YE) December 2011.
In addition, lease rollover of approximately 42% of the net rentable area (NRA)
is scheduled over the next 12 months.

The loan transferred to special servicing in February 2012 for payment default.
The special servicer is enforcing the cash management provisions of the loan
documents, and a lock box is in place. The servicer has filed for foreclosure
and motion to appoint a receiver.

The second loan in special servicing is secured by an 113,455 sf office property
located in Memphis, TN (1.78%). The property was previously 100% occupied by a
single tenant who vacated in 2009. The loan transferred to special servicing in
April 2009 and the special servicer foreclosed on the property in October 2009.
The special servicer is actively pursuing lease up opportunities as well as
marketing the property for sale.

Fitch downgrades the following classes, revises the Rating Outlook on class L,
and assigns Recovery Estimates (REs) as indicated:

--$4.9 million class L to 'Bsf' from 'BB-sf'; Outlook to Negative from Stable;
--$4.9 million class M to 'CCCsf' from 'B+sf'; RE 90%;
--$2.5 million class N to 'CCsf' from 'B-sf'; RE 0%;
--$3.7 million class P to 'Csf' from 'CCCsf'; RE 0%.

Fitch affirms the following classes and revises the Rating Outlook on class K:

--$22.4 million class A-3 at 'AAAsf'; Outlook Stable;
--$169.7 million class A-4 at 'AAAsf'; Outlook Stable;
--$71.5 million class A-1A at 'AAAsf'; Outlook Stable;
--$26.9 million class B at 'AAAsf'; Outlook Stable;
--$11 million class C at 'AAAsf'; Outlook Stable;
--$25.7 million class D at 'AAAsf'; Outlook Stable;
--$11 million class E at 'AAsf'; Outlook Stable;
--$13.5 million class F at 'Asf'; Outlook Stable;
--$12.2 million class G at 'BBBsf'; Outlook Stable;
--$11 million class H at 'BBB-sf'; Outlook Stable;
--$3.7 million class J at 'BB+sf'; Outlook Stable;
--$4.9 million class K at 'BBsf'; Outlook to Negative from Stable.


Classes A-1 and A-2 have repaid in full. Fitch does not rate class Q, which has
been reduced to $6.4 million from $13.5 million due to realized losses.

Fitch had previously withdrawn the rating on the interest-only classes X-C and
X-P.

Additional information on Fitch's criteria for analyzing U.S. CMBS transactions
is available in the Dec. 21, 2011 report, 'Surveillance Methodology for U.S.
Fixed-Rate CMBS Transactions', which is available at 'www.fitchratings.com'
under the following headers:

Structured Finance >> CMBS >> Criteria Reports

Additional information is available at 'www.fitchratings.com'. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.

Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (June 6, 2012);
--'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions' (Dec. 21,
2011).

Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions

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