March 14, 2012 / 8:28 PM / 6 years ago

TEXT-Fitch cuts Merrill Lynch 2004-BPC1

March 14 - Fitch Ratings has downgraded nine classes of Merrill Lynch Mortgage Trust commercial mortgage pass-through certificates, series 2004-BPC1. A detailed list of rating actions follows at the end of this press release. The downgrades reflect an increase in Fitch expected losses across the pool, most of which are attributed to recent valuations on specially serviced assets. Fitch modeled losses 10.7% of the remaining transaction (7.45% of the original pool) Fitch designated 30 loans (39.3%) as Fitch Loans of Concern, including six specially serviced loans (10.1%). As of the February 2012 distribution date, the pool’s aggregate principal balance has reduced by 35.9% to $797 million from $1.24 billion at issuance. Interest shortfalls are affecting classes G through Q. Four loans (4.5%) have defeased since issuance. The largest contributor to Fitch modeled losses is a portfolio of 10 office buildings totaling 287,921 square feet ( 3.5% of the outstanding pool), located in Washington state, mainly around the state capital. The tenants are primarily state agencies and divisions of the state. The loan was transferred to special servicing in July 2010 after the borrower placed junior financing on the properties without lender consent. The special servicer has foreclosed on three of the 10 properties, of which two are under contract for sale and one was sold in January 2012. The special servicer is expected to pursue foreclosure for the remaining seven properties. The second largest contributor to Fitch modeled losses is secured by a 448,762 sf retail property in Indianapolis, IN. The loan (3.5% of the outstanding pool) transferred to special servicing in June 2010 and was modified. The modification closed in December 2010 and the loan was transferred back to the master servicer in March 2011. The loan was split into a $15 million A-Note and $12.5 million B-Note. The borrower made an equity contribution to fund additional reserves and paydown a portion of the outstanding balance. The maturity of the loan has been extended to July 1, 2016. Fitch expects losses at maturity of the loan as current performance of the property does not support the refinance of both the A and B notes. Fitch downgrades the following classes and revises or assigns Recovery Estimates (RE) and revises Rating Outlooks as follows: --$12.4 million class C to ‘BBB-sf’ from ‘BBBsf’; Outlook to Negative from Stable; --$18.6 million class D to ‘Bsf’ from ‘BBsf’; Outlook to Negative from Stable; --$9.3 million class E to ‘CCCsf’ from ‘BBsf’; RE 100%; --$15.5 million class F to ‘CCCsf’ from ‘B-sf’; RE 5%; --$10.9 million class G to ‘CCsf’ from ‘CCCsf’; RE to 0% from 100%; --$15.5 million class H to ‘CCsf’ from ‘CCCsf’; RE to 0% from 100%; --$6.2 million class J to ‘Csf’ from ‘CCsf’; RE to 0% from 100%; --$4.7 million class K to ‘Csf’ from ‘CCsf’; RE to 0% from 40%; --$6.2 million class L to ‘Csf’ from ‘CCsf’; RE 0%. Fitch also affirms the following classes as indicated: --$92.9 million class A-1A at ‘AAAsf’; Outlook Stable; --$16.7 million class A-3 at ‘AAAsf’; Outlook Stable; --$48.8 million class A-4 at ‘AAAsf’; Outlook Stable; --$397.2 million class A-5 at ‘AAAsf’; Outlook Stable; --$94.8 million class A-J at ‘AAAsf’; Outlook Stable; --$26.4 million class B at ‘Asf’; Outlook Stable; --$4.7 million class M at ‘Csf’; RE 0%; --$3.1 million class N at ‘Csf’; RE 0%; --$3.1 million class P at ‘Csf’; RE 0%. Fitch does not rate the $9.8 million class Q. Class A-1 and A-2 have paid in full. Fitch has previously withdrawn the rating on the interest-only classes X-C and X-P. (For additional information on the withdrawal of the rating on class X, see ‘Fitch Revises Practice for Rating IO & Pre-Payment Related Structured Finance Securities’, dated June 23, 2010.)

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