Fitch Downgrades ML-CFC 2007-5

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NEW YORK--(BUSINESS WIRE)-- Fitch Ratings downgrades nine classes of ML-CFC Commercial Mortgage Trust's commercial mortgage pass-through certificates, series 2007-5. A detailed list of rating actions follows at the end of this press release.

The downgrades reflect an increase in Fitch modeled losses across the pool. Fitch modeled losses of 15.7% of the original pool (including losses of 1.4% incurred to date), compared to 12.9% modeled at the previous rating action. This is predominantly due to updated valuations of specially serviced loans, many of which experienced declines in cash flow over the past year. There are currently 24 specially serviced loans (30.5%) in the pool.

As of the October 2011 distribution date, the pool's aggregate principal balance was $4.2 billion, down from $4.42 billion at issuance. There are no defeased loans. There are cumulative interest shortfalls in the amount of $25.5 million currently affecting classes B through Q.

Fitch has identified 88 loans (45.16%) as Fitch Loans of Concern, which includes 24 specially serviced loans (30.5%). The Negative Rating Outlooks on the AM classes reflect the uncertainty of valuations on the recently transferred specially serviced loans as well as the final resolution of Peter Cooper Village/Stuyvesant Town (PCV/ST).

The largest contributor to losses was Peter Cooper Village/Stuyvesant Town (PCV/ST) (19.04%), which comprises 56 multi-story buildings, situated on 80 acres, and includes a total of 11,227 apartments. The loan transferred to special servicing in November 2009 and is currently real estate owned (REO). Property performance continues to be below what is needed to service the debt; however, the securitized loan balance per unit ($267,213) is low relative to other NYC multi family properties. The most recent servicer-reported debt service coverage ratio (DSCR) is 0.63x and occupancy is 95% as of December 2010.

The second largest contributor to losses was HAS Memphis Industrial Portfolio (1.59%), which transferred to special servicing in September 2010 for imminent monetary default. The loan is secured by 15 office/flex/industrial properties with over 1.5 million square feet disbursed across three industrial parks in Memphis, TN. Foreclosure occurred in October 2011.

Fitch downgrades and revises Outlooks on the following classes as indicated:

--$341.7 million class AM to 'BBBsf' from 'AAsf'; Outlook to Negative from Stable;

--$100 million class AM-FL to 'BBBsf' from 'AAsf'; Outlook to Negative from Stable;

--$211.5 million class AJ to 'CCCsf/RR1' from 'B-sf'.

--$175 million class AJ-FL to 'CCCsf/RR1' from 'B-sf'.

--$77.3 million class D to 'CCsf/RR1' from 'CCCsf/RR2'

--$38.6 million class E to 'CCsf/RR1' from 'CCCsf/RR6'

--$55.2 million class F to 'Csf/RR1' from 'CCsf/RR6'

--$49.7 million class G to 'Csf/RR6' from 'CCsf/RR6'

--$49.7 million class H to 'Csf/RR6' from 'CCsf/RR6'

In addition, Fitch affirms the following classes:

--$39.3 million class A-2 at 'AAAsf'; Outlook Stable;

--$21.7 million class A-2FL at 'AAAsf'; Outlook Stable;

--$15.5 million class A-2FX at 'AAAsf'; Outlook Stable;

--$153.4 million class A-3 at 'AAAsf'; Outlook Stable;

--$187.1 million class A-SB at 'AAAsf'; Outlook Stable;

--$1.09 billion class A-4 at 'AAAsf'; Outlook Stable;

--$245 million class A-4FL at 'AAAsf'; Outlook Stable;

--$1.19 billion class A-1A at 'AAAsf'; Outlook Stable;

--$77.3 million class B at 'CCCsf/RR1';

--$33.1 million class C at 'CCCsf/RR1';

--$16.6 million class J at 'Csf/RR6';

--$11 million class K at 'Csf/RR6';

--$11 million class L at 'Csf/RR6';

--$3.9 million class N at 'Dsf/RR6'.

Fitch does not rate class M, P, and Q. Class A-1 is paid in full. The rating on class X was previously withdrawn.

Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Nov. 17, 2010 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' (Aug. 4, 2011);

--'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions' (Nov. 17, 2010).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=646569

Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=574208

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