Approximately $1.37 billion of Structured Securities Affected
New York, December 02, 2010 -- Moody's Investors Service (Moody's) downgraded the ratings of 15 classes
and affirmed two classes of UBS Commercial Mortgage Trust, Commercial
Mortgage Pass-Through Certificates, Series 2007-FL1.
Moody's rating action is as follows:
Cl. A-1, Affirmed at Aaa (sf); previously on
Jan 15, 2008 Definitive Rating Assigned Aaa (sf)
Cl. X, Affirmed at Aaa (sf); previously on Jan 15,
2008 Definitive Rating Assigned Aaa (sf)
Cl. A-2, Downgraded to Baa2 (sf); previously
on Mar 5, 2009 Downgraded to Aa1 (sf)
Cl. B, Downgraded to Ba1 (sf); previously on Mar 5,
2009 Downgraded to A1 (sf)
Cl. C, Downgraded to Ba3 (sf); previously on Mar 5,
2009 Downgraded to A3 (sf)
Cl. D, Downgraded to B1 (sf); previously on Mar 5,
2009 Downgraded to Baa1 (sf)
Cl. E, Downgraded to B2 (sf); previously on Dec 10,
2009 Downgraded to Baa3 (sf)
Cl. F, Downgraded to B3 (sf); previously on Dec 10,
2009 Downgraded to Ba1 (sf)
Cl. G, Downgraded to Caa1 (sf); previously on Sep 3,
2009 Downgraded to Ba2 (sf)
Cl. H, Downgraded to Caa2 (sf); previously on Sep 3,
2009 Downgraded to B1 (sf)
Cl. J, Downgraded to Caa3 (sf); previously on Sep 3,
2009 Downgraded to B3 (sf)
Cl. K, Downgraded to Ca (sf); previously on Sep 3,
2009 Downgraded to Caa1 (sf)
Cl. O-HW, Downgraded to Caa2 (sf); previously
on Sep 3, 2009 Downgraded to B1 (sf)
Cl. O-MD, Downgraded to B1 (sf); previously on
Sep 3, 2009 Downgraded to Ba3 (sf)
Cl. O-WC, Downgraded to Caa2 (sf); previously
on Sep 3, 2009 Downgraded to B2 (sf)
Cl. O-SA, Downgraded to Caa3 (sf); previously
on Sep 3, 2009 Downgraded to B3 (sf)
Cl. O-HA, Downgraded to Ca (sf); previously on
Sep 3, 2009 Downgraded to Caa1 (sf)
The downgrade is due to higher expected losses for the trust resulting
from anticipated losses from specially serviced and troubled loans and
The affirmations are due to key parameters, including Moody's loan
to value (LTV) ratio and Moody's stressed debt service coverage ratio
(DSCR) remaining within acceptable ranges. The pool has paid down
by 10% since Moody's last review, benefiting the most senior
Class A-1 and notional balance only Class X.
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 previous 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
The principal methodology used in this rating was "Moody's Approach to
Rating Large Loan/Single Borrower Transactions" published in July 2000.
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 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 December 10, 2009.
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.
As of the November 15, 2010 distribution date, the transaction's
aggregate certificate balance has decreased to $1.41 billion
from $1.56 billion at last review. The Certificates
are collateralized by 25 floating rate whole loans and senior interests
in whole loans. The loans range in size from 1% to 13%
of the pooled balance, with the top three loans representing 32%
of the pool. Except for the Maui Prince Hotel & Resort Loan
(now called Makena Beach & Golf Resort), which was modified,
all other loans have additional debt in the form of a non-pooled
or rake bond within the trust or a B note or mezzanine debt outside of
the trust. The current low interest rate environment coupled with
low loan spreads have helped the loans stay current through the last two
years, but high leverage continues to be a cause for concern.
Moody's weighted average trust loan to value (LTV) ratio is 97%
and Moody's weighted average stressed debt service coverage ratio (DSCR)
for trust debt is 0.80X. Moody's weighted average
first mortgage LTV is 138% and Moody's LTV including mezzanine
debt is 181%.
The largest loan in the pool is secured by a fee interest in Jumeirah
Essex House ($186 million -13% of the pooled balance)
located in Midtown Manhattan on Central Park South. The sponsor
for the 515-room full-service hotel and 26 condominium units
is Dubai Investment Group Limited and Dubai Holdings LLC. This
is a flag ship property for the Jumeirah brand in the US. The final
maturity date, including extension options, is September 9,
2012. There is an additional debt in the form of non-trust
junior component and mezzanine debt outside the trust.
Hotels located in New York City have suffered significant declines in
operating performance much like the rest of the US during the last two
years. However hotels located in gateway cities such as New York
City, Boston and Miami have achieved double digit Revenue per Available
Room (RevPAR) growth in the first 10 months of 2010 over the same period
in 2009. According to Smith Travel Research, New York City
RevPAR in the year-to-date through October 2010 period was
$181.40, up 13.6% from the same period
in 2009. Luxury and urban properties are showing particularly strong
improvement compared to other segments.
For the nine months ending September 2010, the Jumeirah Essex House
achieved 76.7% occupancy at $356.30 Average
Daily Rate (ADR) for a RevPAR of $273.14. During
the same nine month period in 2009, occupancy was at 72.6%
with an ADR of $321.01 resulting in a RevPAR of $232.89.
Net Operating Income (NOI) for the first nine months of 2010 was $1.3
million. Although the in-place cash flow is not enough to
support required debt service, the inherent value in the property,
its flag ship status in the chain, as well as significant replacement
cost supports Moody's value of $179 million. The current
credit estimate for this loan is B3.
Maui Prince Resort Loan ($150 million -11% of pooled
balance plus $30 million in three rake bonds) is currently in special
servicing, and waiting to be returned to master servicer post modification.
The loan is secured by fee simple interest in Maui Prince Resort (310
guestrooms), two18-hole golf course and 1,300 acres
of undeveloped land located in Makena (Maui), Hawaii. The
loan was transferred to special servicing in June 2009. The rake
investor assumed the A note and converted their interest in the rake bonds
to equity as part of the assumption. The A note received a principal
pay-down of $12.5 million, and the loan maturity
has been extended by three years with two one-year extension options.
The new sponsors for this loan are AREA Property Partners (formerly known
as Apollo Real Estate Advisors), Trinity Investments, LLC,
and Stanford Carr Development, LLC, a Honolulu based residential
development firm. Moody's does not rate the three rake bonds
associated with this loan (Classes M-MP, N-MP and
O-MP). Total interest shortfalls to these three rake classes
total $334,849 as of the November distribution date.
In August 2010, the property ranked 15th in Travel + Leisure
magazine's Top 25 Hotels in Hawaii. In August 2010,
the property ranked 15th in Travel + Leisure magazine's Top
25 Hotels in Hawaii. Moody's value for the hotel is $150
million, and current credit estimate for this loan is B3.
The Magazine Multifamily Portfolio ($110 million -8%
of the pooled balance) is secured by fee interest in a seven multifamily
property portfolio located in Florida. The portfolio totals 2,120
units and the properties were built between 1987 and 1992. The
properties are located in Palm Beach Gardens, Orlando, Sarasota
The sponsors are Morgan Stanley Real Estate Fund V U.S.,
LP and Onex Real Estate Partners LP. There is a $10 million
junior component and a $60 million mezzanine loan outside of the
trust. The final maturity date including extension options is July
9, 2012. The portfolio's NOI for 2009 was $9.5
million, and NOI for the first nine months of 2010 was $7.5
million. Moody's value is $117 million, and
the current credit estimate is B3.
There are currently six loans totaling 21% of pooled balance in
special servicing. However, Maui Prince Resort and 281 &
321 Summer Street loans (totaling 12% of pooled balance) have been
modified and pending return to master servicer. Cumulated bond
loss totals $30 million (Classes M-MP, N-MP
and O-MP) plus $83 to Class L. Interest shortfalls
totals $685,927 affecting pooled Class L, and rake
classes M-MP, N-MP, O-MP, O-HW,
O-BH, O-SA and O-HA.
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
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.
Eun Jee Park
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service
Michael M. Gerdes
Senior Vice President
Structured Finance Group
Moody's Investors Service
Moody's Investors Service
Moody's Downgrades 15 and Affirms Two CMBS Classes of UBS 2007-FL1
250 Greenwich Street
New York, NY 10007