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Announcement:

Moody's Affirms 14 CMBS Classes of Banc of America Large Loan, Inc. 2006-BIX1

Global Credit Research - 09 Sep 2010

Approximately $490.9 Million of Structured Securities Affected

New York, September 09, 2010 -- Moody's Investors Service (Moody's) affirmed the ratings of 14 classes of Banc of America Large Loan, Inc. Commercial Mortgage Pass-Through Certificates, Series 2006-BIX1 including eight pooled classes and six non-pooled, or rake, classes. Moody's rating action is as follows:

US$211.269147M Cl. A-2 Certificate, Affirmed at Aaa (sf); previously on Nov 20, 2006 Definitive Rating Assigned Aaa (sf)

Cl. X-1B Certificate, Affirmed at Aaa (sf); previously on Nov 20, 2006 Definitive Rating Assigned Aaa (sf)

Cl. X-2 Certificate, Affirmed at Aaa (sf); previously on Nov 20, 2006 Definitive Rating Assigned Aaa (sf)

Cl. X-3 Certificate, Affirmed at Aaa (sf); previously on Nov 20, 2006 Definitive Rating Assigned Aaa (sf)

Cl. X-4 Certificate, Affirmed at Aaa (sf); previously on Nov 20, 2006 Definitive Rating Assigned Aaa (sf)

Cl. X-5 Certificate, Affirmed at Aaa (sf); previously on Nov 20, 2006 Definitive Rating Assigned Aaa (sf)

US$15.035235M Cl. B Certificate, Affirmed at Aaa (sf); previously on Nov 8, 2007 Upgraded to Aaa (sf)

US$43.214117M Cl. C Certificate, Affirmed at Aaa (sf); previously on Nov 8, 2007 Upgraded to Aaa (sf)

US$3.791944M Cl. J-CP Certificate, Affirmed at Ba1 (sf); previously on Mar 18, 2010 Downgraded to Ba1 (sf)

US$5.622109M Cl. K-CP Certificate, Affirmed at Ba2 (sf); previously on Mar 18, 2010 Downgraded to Ba2 (sf)

US$11.024802M Cl. L-CP Certificate, Affirmed at Ba3 (sf); previously on Mar 18, 2010 Downgraded to Ba3 (sf)

US$1.374209M Cl. J-CA Certificate, Affirmed at Ba1 (sf); previously on Mar 18, 2010 Downgraded to Ba1 (sf)

US$0.941439M Cl. K-CA Certificate, Affirmed at Ba2 (sf); previously on Mar 18, 2010 Downgraded to Ba2 (sf)

US$1.094683M Cl. L-CA Certificate, Affirmed at Ba3 (sf); previously on Mar 18, 2010 Downgraded to Ba3 (sf)

The affirmations of the pooled classes were due to the build-up of credit enhancement from loan payoffs, release premium payments and amortization sufficient to maintain the current raitings, even though overall pool performance has declined from Moody's previous review. The affirmations of the rake classes were due to the stable performance of the CarrAmerica - Pool III (National Portfolio) Loan and the CarrAmerica - Pool II (CAR Portfolio) Loan since our previous review of the loans. The Blackstone Group is the sponsor of both loans.

Moody's analysis reflects a forward-looking view of the likely range of collateral performance over the medium term. From time to time, Moody's may, if warranted, change these expectations. Performance that falls outside an acceptable range of the key parameters may indicate that the collateral's credit quality is stronger or weaker than Moody's had anticipated during the current review. Even so, deviation from the expected range will not necessarily result in a rating action. There may be mitigating or offsetting factors to an improvement or decline in collateral performance, such as increased subordination levels due to amortization and loan payoffs or a decline in subordination due to realized losses.

Primary sources of assumption uncertainty are the current stressed macroeconomic environment and continuing weakness in the commercial real estate and lending markets. Moody's currently views the commercial real estate market as stressed with further performance declines expected in the industrial, office, and retail sectors. Hotel performance has begun to rebound, albeit off a very weak base. Multifamily has also begun to rebound reflecting an improved supply / demand relationship. The availability of debt capital is improving with terms returning towards market norms. Job growth and housing price stability will be necessary precursors to commercial real estate recovery. Overall, Moody's central global scenario remains "hook-shaped" for 2010 and 2011; we expect overall a sluggish recovery in most of the world's largest economies, returning to trend growth rate with elevated fiscal deficits and persistent unemployment levels.

The principal methodology used in rating and monitoring this transaction was Moody's "CMBS: Moody's Approach to Rating Large Loan/Single Borrower Transactions", rating methodology published in July 2000. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found on Moody's website. In addition, Moody's publishes a weekly summary of structured finance credit, ratings and methodologies, available to all registered users of our website, at www.moodys.com/SFQuickCheck.

Moody's review incorporated the use of the excel-based CMBS Large Loan Model v 8.0 which is used for both large loan and single borrower transactions. The large loan model derives credit enhancement levels based on an aggregation of adjusted loan level proceeds derived from Moody's loan level LTV ratios. Major adjustments to determining proceeds include leverage, loan structure, property type, and sponsorship. These aggregated proceeds are then further adjusted for any pooling benefits associated with loan level diversity, other concentrations and correlations. The model also incorporates a supplementary tool to allow for the testing of the credit support at various rating levels. The scenario or "blow-up" analysis tests the credit support for a rating assuming that loans in the pool default with an average loss severity that is commensurate with the rating level being tested.

Moody's ratings are determined by a committee process that considers both quantitative and qualitative factors. Therefore, the rating outcome may differ from the model output.

The rating action is a result of Moody's on-going surveillance of commercial mortgage backed securities (CMBS) transactions. Moody's monitors transactions on a monthly basis through two sets of quantitative tools -- MOST® (Moody's Surveillance Trends) and CMM (Commercial Mortgage Metrics) on Trepp -- and on a periodic basis through a comprehensive review. Moody's prior full review is summarized in a press release dated March 6, 2009. The previous review was part of Moody's first quarter 2009 ratings sweep and incorporated assumptions for capitalization rates and stressed cash flows that were outlined in "Rating Methodology Update: US CMBS Conduit and Fusion Review Prompted by Declining Property Values and Rising Delinquencies" dated February 5, 2009. Moody's prior review of the non-pooled, or rake, classes is summarized in a press release dated April 15, 2010. Please see the ratings tab on the issuer / entity page on moodys.com for the last rating action and the ratings history.

As of the August 16, 2010 Payment Date, the transaction's aggregate certificate balance has decreased by 60% to $490.4 million from $1.239 billion at securitization due to the payoff of seven loans originally in the pool; payment of release premiums associated with three loans, the CarrAmerica -- Pool III (National Portfolio) Loan ($153.6 million, 33% of the pool); the JER Denver Office Portfolio Loan ($38.6 million - 8%); and the CarrAmerica -- Pool II (CAR Portfolio) Loan ($20.3 million - 4%); and loan amortization associated with the Bassett Place Mall Loan ($32.1 million - 7%), the Lodgian Airport Hotels Loan ($16.0 million - 3%); and the Holiday Inn Hilton Head Loan ($12.5 million - 3%). The Certificates are collateralized by eleven mortgage loans ranging in size from 33% to 2% of the pool. Subsequent to the August 16, 2010 Payment Date ten loans remain in the trust, as on September 7, 2010 the Greece Ridge Loan ($72.0 million, 15%) paid off in full. Three loans are currently in special servicing, including the One Pepsi Way Loan ($40 million - 9%), Basset Place Mall ($32.1 million -- 7%) and Ballantyne Village ($31.5 million -- 7%). Eight loans (63%) are on the master servicer's watchlist. As part of our ongoing monitoring of a transaction, Moody's reviews the watchlist to assess which loans have material issues that could impact performance. Watchlisted loans are loans which meet certain portfolio review guidelines established as part of the CRE Finance Council (CREFC) monthly reporting package. To date the pool has not experienced any losses.

Moody's was provided with full year 2009 operating results for 100% of the loans in the pool, and operating results for 1st Quarter 2010, for six loans in the pool (71% of the pooled balance). Moody's weighted average loan to value ("LTV") ratio is 89%, compared to 80% at Moody's prior review. Moody's stressed debt service ratio ("DSCR") is 1.25X, compared to 1.31X at last review. Moody's stressed DSCR is based on Moody's net cash flow ("NCF") and a 9.25% stressed rate applied to the loan balance.

Moody's uses a variation of Herf to measure diversity of loan size, where a higher number represents greater diversity. Loan concentration has an important bearing on potential rating volatility, including risk of multiple notch downgrades under adverse circumstances. The credit neutral Herf score is 40. Large loan transactions have a Herf of less than 20. This pool has a Herf of 5 following the payoff of the Greece Ridge loan, as compared to a herf of 6 at Moody's prior review.

The largest loan is the CarrAmerica -- Pool III (National Portfolio) Loan ($153.6 million, 33% of the pool) which is the 40% portion of a pari passu split loan structure. There is also $20.4 million of rake trust debt (Classes J-CP, K-CP and L-CP), a $170 million non-trust junior secured component, and $166 million of mezzanine debt. The loan is secured by 30 suburban office and research and development ("R&D") properties. The portfolio contains approximately 8.7 million square feet, of which 6.0 million square feet represents the loan sponsor's wholly-owned interests and its partially-owned interests in joint venture properties. Of the 6.0 million square feet, approximately 4.9 million square feet (22 properties) is secured by first mortgage liens and 1.1 million square feet (8 properties) is secured by a pledge of refinance and sale proceeds. The pledged properties represent approximately 8% of the total allocated trust balance. The outstanding trust balance has decreased by 72% since securitization from the payment of loan collateral release premiums. The portfolio has geographic concentration in the San Jose, California metro area, with 61% of the mortgage collateral by net rentable area (16 properties) located in San Jose, Santa Clara, Palo Alto and Sunnyvale. Both the suburban San Jose office market and industrial market (includes R&D properties) have shown signs of improvement. The San Jose suburban office market has a Second Quarter 2010 Moody's Red-Yellow-Green® score of Red (20), compared to Red (6) in the Fourth Quarter 2009. The San Jose industrial market has a Second Quarter 2010 Moody's Red-Yellow-Green® score of Yellow (48), compared to Red (23) in the Fourth Quarter 2009.

As of June 2010, the loan collateral secured by first mortgage liens had a weighted average occupancy rate of 82%, compared to 78% at last review and 87% at securitization. The San Jose office market for all classes posted a 22% vacancy rate as of the 2nd quarter of 2010, compared to 24% at 2009 year-end, according to CB Richard Ellis. Rents are projected to decline 6% both during 2010 and 2011. The San Jose vacancy rate for R&D properties was 18%, as of 2nd Quarter 2010, not significantly different than at year end 2009. Rents for R&D properties are projected to be stable during 2010, increasing 5% during 2011.

Moody's LTV for the trust debt is 95%, based on mortgage collateral only, the same as at last review on April 15, 2010. Moody's stressed DSCR is 1.12X, the same as at last review. Moody's underlying rating for the pooled balance is Baa3, the same as at last review. The final loan extended maturity date is in August 2011.

The CarrAmerica -- Pool II (CAR Portfolio) Loan ($20.3 million - 4%) represents the 40% portion of a $59.2 million pari passu loan. There is also $3.4 million of rake trust debt (Classes J-CA, K-CA and L-CA), a $22.8 million non-trust junior component and $21.6 million of mezzanine debt. The loan is secured by four office properties with a total of 719,027 square feet. San Mateo Center, a 216,691 square foot Class A office building is located in San Mateo, California; Mountain View Gateway Center, a 236,402 square foot Class A office building is located in Mountain View, California; and two Class A office properties are located in Austin, Texas -- The Setting, containing 137,216 square feet and the adjacent City View Center I, containing 128,716 square feet. At securitization the portfolio contained 2.1 million square feet in 11 properties. The outstanding pool balance has decreased 74% since securitization due to property releases and the related release premiums. As of June 2010 the portfolio was 83% leased, compared to 78% at last review. It is anticipated that portfolio revenue will decrease as current leases expire and new leases are signed at lower rents due to current and projected market conditions in the properties' submarkets. The San Jose, suburban San Francisco and Austin markets have shown some improvement. Moody's Red-Yellow-Green® scores for these markets for the 2nd Quarter 2010 were Red (20), Yellow (50) and Yellow (46), respectively, compared to Red (6), Yellow (48) and Yellow (36), respectively in the 4th Quarter 2009. LTV for the trust debt is 75%, the same as last review. Moody's underlying rating is Baa2, the same as last review. The final loan extended maturity date is in August 2011.

The One Pepsi Way Loan ($40.0 million -- 10%) was transferred to special servicing on April 30, 2010. The loan is secured by a 520,000 square foot office building in Somers, New York that is currently 79% leased to two tenants, Pepsi Bottling Group ("Pepsi") and General Motors. The building was built in 1987 for Pepsi who currently leases 379,692 square feet (70% of net rentable area) with a lease expiration date in December 2010. In August 2009 Pepsi merged with PepsiCo, which is headquartered approximately 19 miles away in Purchase, New York. General Motors leases 45,705 square feet (9% of net rentable) with a lease expiration date in February 2011. General Motors has indicated that it does not intend to renew its lease upon its expiration. However, the borrower has been in discussions with Pepsi regarding a five-year lease renewal for the entire building. The borrower has requested an extension of the loan past its current maturity date in June 2011. The borrower has conveyed to the special servicer that Pepsi is concerned about a loan maturity date prior to the expiration of an extended lease term. The maximum loan extension permitted under the terms of the Pooling and Servicing Agreement is to October 2012. The loan sponsor, Murray Hill Properties, is in discussions with Pepsi to get them comfortable with a loan maturity prior to the expiration date of a new lease.

Moody's valued the property based on a "dark"/"lit" analysis which assumed a 50% probability that the property will be totally vacant, and a 50% probability that it will be leased at market rents to a market level of occupancy. This analysis resulted in a Moody's LTV for the trust debt of 104%, compared to 76% at last review. Additional debt includes a non-trust junior component with a current balance of $15.0 million and $20.0 million in mezzanine debt.

The Bassett Place Mall Loan ($32.1 million -- 8%) was transferred to special servicing on March 25, 2010 at which time the loan was extended to September 2010. Negotiations are currently in progress between the borrower and special servicer for an additional loan extension. The loan is secured by 507,003 square feet of retail space in a 590,133 square foot regional mall located in El Paso, Texas. The mall is anchored by Costco, Target and Kohl's plus an 18-screen Premiere movie theater. As of June 2010 the in-line space was 89% leased, compared to 80% at last review. Comparable tenant sales for calendar year 2009 were $313 per square foot ("psf"), compared to $303 psf at last review and $273 psf at securitization. Moody's LTV is 79%, compared to 85% at last review. Additional debt includes a non-trust junior component with a current balance of $24.0 million. The loan sponsor is Christopher C. Maguire.

The Ballantyne Village Loan ($31.5 million -- 8%) was transferred to special servicing in July 2009. The loan was not extended since the last maturity date in January 2010. The borrower was provided with a default letter based on maturity default. In June 2010 the Court entered an Order of Foreclosure authorizing a foreclosure sale that was initially scheduled for July 29, 2010. Discussions are on-going with the borrower to try to resolve the default. The loan is secured by a lifestyle type shopping center containing 166,041 square feet, located in Charlotte, North Carolina. The two largest tenants are the Village Theater (five screens) and the YMCA occupying 10,915 square feet. As of July 2010 the property was 79% leased, compared to 87% at last review and 75% at securitization. Comparable tenant sales, excluding the movie theater, were $212 psf or the trailing 12-month period ending in July 2010. Moody's LTV is 114%, compared to 76% at last review. Additional debt includes a non-trust junior component with a current balance of $18.5 million. The loan sponsor is Robert Bruner.

The Desert Sky Mall Loan ($40,000,000 -- 10%) is secured by a 444,551 square feet of retail space in an 890,190 square foot regional mall located in Phoenix, Arizona. Additional debt includes a non-trust junior component in the amount of $11.5 million. The mall is anchored by, Burlington Coat Factory, Dillard's, Sears and La Curacao. With the exception of La Curacao, which opened in September 2007 as part of the mall's redevelopment, the anchors are not collateral for the mortgage loan. Mervyn's, a fifth anchor, closed in December 2008 and the space remains vacant. As of June 2009 the in-line space was 86% leased, the same as last review. For the trailing 12-month period ending June 2010 in-line tenant sales were $240 psf, compared to $308 psf at last review, and $327 psf at securitization. Moody's LTV is 87%, compared to 82% at last review. Additional debt includes a non-trust junior component with a current balance of $11.5 million. The final extended loan maturity date is in March 2011. The loan sponsor is The Macerich Partnership, L.P

New York
Jay Rosen
Vice President - Senior Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Andrea M. Daniels
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Investors Service
250 Greenwich Street
New York, NY 10007
USA

Moody's Affirms 14 CMBS Classes of Banc of America Large Loan, Inc. 2006-BIX1
No Related Data.
© 2018 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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