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By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

 

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2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

 

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Rating Action:

Moody's Affirms One and Downgrades Two CMBS Classes of MLFT 2008-LAQ

23 Mar 2011

Approximately $1.438 Billion of Structured Securities Affected

New York, March 23, 2011 -- Moody's Investors Service (Moody's) affirmed the rating of one pooled class and downgraded two pooled classes of Merrill Lynch Floating Trust Commercial Mortgage Pass-Through Certificates, Series 2008-LAQ as follows:

Cl. A-1, Affirmed at Aaa (sf); previously on Mar 28, 2008 Definitive Rating Assigned Aaa (sf)

Cl. A-2, Downgraded to Baa1 (sf); previously on May 12, 2010 Downgraded to A1 (sf)

Cl. A-3, Downgraded to Baa3 (sf); previously on May 12, 2010 Downgraded to Baa1 (sf)

RATINGS RATIONALE

The downgrades are a result of lower-than-expected property performance improvement and the resulting high leverage of the loan that matures in July 2012 . The affirmation of the most senior class is due to key parameters, including Moody's loan to value (LTV) ratio remaining within an acceptable range.

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 sluggish macroeconomic environment and varying performance in the commercial real estate property markets. However, Moody's expects to see increasing or stabilizing property values, higher transaction volumes, a slowing in the pace of loan delinquencies and greater liquidity for commercial real estate in 2011. The hotel and multifamily sectors are continuing to show signs of recovery, while recovery in the office and retail sectors will be tied to recovery of the broader economy. The availability of debt capital continues to improve with terms returning toward market norms. Moody's central global macroeconomic scenario reflects an overall sluggish recovery through 2012, amidst ongoing individual, corporate and governmental deleveraging, persistent unemployment, and government budget considerations.

The principal methodology used in this rating was "Moody's Approach to Rating Large Loan/Single Borrower Transactions" published in July 2000.

Moody's review incorporated the use of the excel-based Large Loan Model v 8.0. 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.

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 May 12, 2010. Please see the ratings tab on the issuer / entity page on moodys.com for the last rating action and the ratings history.

Moody's Investors Service did not receive or take into account a third-party due diligence report on the underlying assets or financial instruments related to the monitoring of this transaction in the past six months.

DEAL PERFORMANCE

As of the March 9, 2011 distribution date, the transaction's aggregate certificate balance remains effectively the same at $1.44 billion since securitization. In addition to the trust debt there is a non-trust junior participation interest and mezzanine loan for a total of $3.05 billion in total debt outstanding.

The transaction is secured by a cross-collateralized and cross-defaulted floating rate mortgage loan secured by 355 properties totaling 44,110 guestrooms. The limited service hotel chain is operated under three brands (La Quinta Inn, La Quinta Inn and Suites, and Baymont Inn and Suites) located in 35 states. The loan's current maturity date is July 2011 and the final maturity date including an extension option is July 2012. The sponsor of the loan is The Blackstone Group.

The portfolio achieved Revenue per Available Room (RevPAR) of $36.92 in 2010, almost flat to that of 2009 of $36.86. The loan's EBIDTA for the calendar year 2010 was $255.3 million compared to that of year-end 2009 at $253.4 million. However, the month of January 2011 EBIDTA was $13.5 million, up 15% from $11.7 million in January 2010. The full year 2011 budgeted EBIDTA is $277.5 million. The overall US lodging sector continues to recover from steep declines experienced in 2009 and 2010. And the portfolio's January comparison between 2011 and 2010 reflects this positive trend.

The portfolio's net cash flow (NCF) after replacement reserves and management fees for 2010 was $204 million, well below Moody's NCF assumption of $237 million at last review. Moody's did anticipate that the portfolio would continue to struggle during the early part of 2010 bust also factored in a stronger rebound in the latter half. Based on the most recent financial data, the Moody's 2011 Review NCF is $224 million, which would be in line with 2011 budgeted NCF.

Moody's weighted average trust loan to value (LTV) ratio is 75% compared to 73% at last review. Moody's stressed debt service coverage ratio (DSCR) for the trust is at 1.68X compared to 1.78X at last review. The trust has not experienced any losses since securitization.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, parties not involved in the ratings, public information, and confidential and proprietary Moody's Investors Service information.

Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of maintaining a credit rating.

Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

New York
Eun Jee Park
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Michael M. Gerdes
Senior Vice President
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
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Affirms One and Downgrades Two CMBS Classes of MLFT 2008-LAQ
No Related Data.
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