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TEXT-S&P cuts some Asset Securitization Corp 1996-D2 ratings
March 14, 2012 / 8:48 PM / 6 years ago

TEXT-S&P cuts some Asset Securitization Corp 1996-D2 ratings

March 14 - OVERVIEW	
     -- We lowered our rating on class B-1A to 'CCC- (sf)' from 'B- (sf)' from 	
Asset Securitization Corp.'s series 1996-D2, a U.S. CMBS transaction. 	
     -- In addition, we affirmed our 'BB (sf)' rating on class A-4 from the 	
same transaction.	
     -- The rating actions reflect our analysis of the credit characteristics 	
of the remaining pool collateral, which consists of 10 loans and one REO 	
asset, as well as the deal structure, and the liquidity available to the 	
trust. The downgrades reflect credit support erosion that we anticipate will 	
occur upon the eventual resolution of the two assets ($16.8 million, 53.9%) 	
that are with the special servicer.	
    	
    March 14 - Standard & Poor's Ratings Services today lowered its rating to
'CCC- (sf)' from 'B- (sf)' on the class B-1A commercial mortgage pass-through
certificates from Asset securitization Corp.'s series 1996-D2, a U.S. commercial
mortgage-backed securities (CMBS) transaction. Concurrently, we affirmed our 'BB
(sf)' rating on class A-4 from the same transaction.	
	
Our rating actions follow our analysis of the credit characteristics of the 	
collateral remaining in the pool, as well as the deal structure and the 	
liquidity available to the trust. As of the Feb. 15, 2012 trustee remittance 	
report, 10 loans and one real estate-owned (REO) asset remained in the trust 	
totaling $31.1 million, compared with 124 loans totaling $879.5 million at 	
issuance. We constrained the rating on the class A-4 certificates despite its 	
relatively high credit enhancement levels (73.68% according to the February 	
2012 trustee remittance report) due to a lack of diversity in the trust. The 	
downgrade further reflects credit support erosion that we anticipate will 	
occur upon the eventual resolution of the two assets ($16.8 million, 53.9%) 	
that are with the special servicer. We also considered the monthly interest 	
shortfalls affecting the trust. 	
	
As of the Feb. 15, 2012, trustee remittance report, the trust experienced 	
interest shortfalls totaling $109,424. The interest shortfalls were due to 	
appraisal subordinate entitlement reduction (ASER) amounts totaling $81,580, 	
subordinate class advance reduction amounts totaling $24,335 and special 	
servicing fees of $3,509 for the two specially serviced assets. The current 	
monthly interest shortfalls affected the class B-1B certificates, which we 	
previously downgraded to 'D (sf)', and caused a reduction in the liquidity 	
support available to the more senior classes.	
	
CREDIT CONSIDERATIONS	
	
As of the Feb. 15, 2012, trustee remittance report, two assets ($16.8 million, 	
53.9%) in the pool were with the special servicer, CWCapital Asset Management 	
LLC (CWCapital). 	
	
The Care Centers Pool-1 loan ($8.4 million, 27.0%) was transferred to special 	
servicing on Sept. 21, 2010, due to an unauthorized change of operator and 	
manager. The payment status is in foreclosure. The loan has a total reported 	
exposure of $10.6 million. The loan collateral consists of three skilled 	
nursing facilities totaling 416 beds in the Chicago market area. CWCapital has 	
accepted a discounted payoff of the loan and expects it to go to closing in a 	
few months. Servicer reported combined debt service coverage (DSC) was 1.79x 	
for the 12 months ended Nov. 30, 2011. An appraisal reduction amount (ARA) of 	
$3.5 million is in effect against this specially serviced loan. Standard & 	
Poor's expects a moderate loss upon the eventual disposition of this loan. 	
	
The Woodfin Suites REO asset ($8.4 million, 26.9%) was transferred to special 	
servicing on Nov. 20, 2009, due to imminent monetary default and became REO on 	
July 11, 2011. The asset, which has a total reported exposure of $10.5 	
million, consists of a 203-room independently operated hotel in Rockville, Md. 	
According to CWCapital, the property is currently under contract for sale. An 	
ARA of $3.1 million is in effect against this asset. Servicer reported 	
occupancy was 40.0% as of Dec. 31, 2011. Standard & Poor's anticipates a 	
moderate loss upon the eventual resolution of this asset.	
	
TRANSACTION SUMMARY	
	
As of the Feb. 15, 2012, trustee remittance report, the collateral pool 	
balance was $31.1 million, which is 3.5% of the balance at issuance. The pool 	
now includes 10 loans and one REO asset, down from 124 loans at issuance. 	
There are six defeased loans ($10.0 million, 32.4%) and two specially serviced 	
assets ($16.8 million, 53.9%), which are discussed above. The remaining three 	
loans ($4.3 million, 13.7%) are discussed below. The trust experienced $91.4 	
million in principal losses from 20 assets to date. 	
	
The Nags Head Inn loan ($1.8 million, 5.7%) is secured by a 100-room 	
independently operated hotel in Nags Head, N.C. The master servicer, Pacific 	
Life Insurance Co. (Pacific Life), reported a DSC of 0.82x and an occupancy of 	
48.2% for the year ended Dec. 31, 2011. 	
	
The Sierra Pines Mobile Home Park loan ($1.4 million, 4.5%) is secured by a 	
188-pad mobile home park in Grass Valley, Calif. Pacific Life reported a DSC 	
of 4.14x and an occupancy of 99.5% for the nine months ended Sept. 30, 2011. 	
	
The Pioneer Villa Mobile Home Park loan ($1.1 million, 3.5%) is secured by a 	
100-pad mobile home park located in Boring, Ore. Servicer reported DSC was 	
1.89x and occupancy was 98.0% for the nine months ended Sept. 30, 2011.    	
	
Standard & Poor's stressed the assets in the pool according to its current 	
criteria. The resultant credit enhancement levels are consistent with our 	
rating actions.	
	
STANDARD & POOR'S 17G-7 DISCLOSURE REPORT	
	
Sec Rule 17g-7 requires an NRSRO, for any report accompanying a credit rating 	
relating to an asset-backed security as defined in the Rule, to include a 	
description of the representations, warranties and enforcement mechanisms 	
available to investors and a description of how they differ from the 	
representations, warranties and enforcement mechanisms in issuances of similar 	
securities. The Rule applies to in-scope securities initially rated (including 	
preliminary ratings) on or after Sept. 26, 2011.	
	
If applicable, the Standard & Poor's 17g-7 Disclosure Report included in this 	
credit rating report is available atRELATED CRITERIA AND RESEARCH	
 	
     -- Global Structured Finance Scenario And Sensitivity Analysis: The 	
Effects Of The Top Five Macroeconomic Factors, published Nov. 4, 2011.	
     -- U.S. Government Support In Structured Finance And Public Finance 	
Ratings, published Sept. 19, 2011.	
     -- Updated Defeasance Criteria For U.S. CMBS Transactions, published Aug. 	
16, 2011.	
     -- U.S. CMBS Rating Methodology And Assumptions For Conduit/Fusion Pools, 	
published Nov. 3, 2010.	
     -- Methodology And Assumptions For Analyzing The Major Property Types In 	
U.S. CMBS Transactions, published June 14, 2010.	
     -- U.S. CMBS 'AAA' Scenario Loss And Recovery Application, published July 	
21, 2009.	
     -- Rating U.S. CMBS In The Face Of Interest Shortfalls, published Feb. 	
23, 2006.

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