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Rating Action:

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

17 Mar 2011

Approximately $159.9 Million of Structured Securities Affected

New York, March 17, 2011 -- Moody's Investors Service (Moody's) downgraded the ratings of three non-pooled, or rake, classes of Banc of America Large Loan, Inc. Commercial Mortgage Pass-Through Certificates, Series 2006-BIX1. Moody's also affirmed the ratings of four pooled classes and three rake classes. Moody's rating action is as follows:

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

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

Cl. B, Affirmed at Aaa (sf); previously on Nov 8, 2007 Upgraded to Aaa (sf)

Cl. C, Affirmed at Aaa (sf); previously on Nov 8, 2007 Upgraded to Aaa (sf)

Cl. J-CP, Downgraded to Ba3 (sf); previously on Mar 18, 2010 Downgraded to Ba1 (sf)

Cl. K-CP, Downgraded to B1 (sf); previously on Mar 18, 2010 Downgraded to Ba2 (sf)

Cl. L-CP, Downgraded to B2 (sf); previously on Mar 18, 2010 Downgraded to Ba3 (sf)

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

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

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

RATINGS RATIONALE

The downgrades were due to the decline in performance of the CarrAmerica-Pool 3 (National Portfolio) Loan that was transferred to special servicing on February 1, 2011 due to imminent maturity default. The final extended maturity date of the loan is August 9, 2011. The borrower indicated that the national economic recession has hurt the performance of the properties that secure the loan.

The affirmations of the pooled and non-pooled classes were 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 "CMBS: Moody's Approach to Rating Large Loan/Single Borrower Transactions" published in July 2000.

In addition to methodologies and research available on moodys.com, Moody's publishes a weekly summary of structured finance credit, ratings and methodologies, available to all registered users on our website, at www.moody.com/SFDQuickCheck.

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 September 9, 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 15, 2011 Payment Date, the transaction's aggregate certificate balance has decreased by 71% to $357.4 million from $1.2 billion at securitization due to the payoff of ten loans originally in the pool; payment of release premiums associated with four loans, the CarrAmerica-Pool 3 (National Portfolio) Loan ($153.1 million - 46% of the pool), the JER Denver Office Portfolio Loan ($38.6 million - 12%), the CarrAmerica -- Pool 2 (CAR Portfolio) Loan ($20.3 million -- 6%) and the Lodgian Airport Hotels Loan ($9.4 million - 3%); and loan amortization associated with the Bassett Place Mall Loan ($31.3 million -- 9%). The Certificates are collateralized by eight mortgage loans ranging in size from 3% to 45% of the pool. All of the loans in the pool, with the exception of the Ballantyne Village Loan, that is a non-performing matured balloon loan, have final maturity dates during 2011.

To date the pool has not experienced any losses. Four loans are currently in special servicing, including the CarrAmerica-Pool 3 (National Portfolio) Loan, the One Pepsi Way Loan ($40 million -- 12%), the Ballanytne Village Loan ($31.5 million- 9%) and the Lodgian Airport Hotels Loan. There currently are no loans on the master servicer's watchlist.

Moody's weighted average pooled loan to value (LTV) ratio is 94% compared to 89% at last review. Moody's stressed debt service coverage ratio (DSCR) is 1.07x compared to 1.25x at last review.

The largest loan is the CarrAmerica-Pool 3 (National Portfolio ) Loan ($153.1 million -- 46% of the pool) which is the 40% portion of a pari passu split loan structure that is securitized in COMM 2006-FL-12 (52.5%) and CGCMS 2006-FL2 (7.5%). There is also $20.4 million of non-pooled, or rake, trust debt (Classes J-CP, K-CP and L-CP), a $179 million non-trust junior secured component, and $150 million of mezzanine debt. The total outstanding loan balance is $763.1 million. The loan is secured by 29 office and research and development (R&D) properties. Twenty-two properties containing approximately 4.9 million square feet are subject to first mortgage liens. The borrower's joint venture interests in seven properties are secured by pledges of refinance and sale proceeds. The outstanding trust balance has decreased by 72% since securitization from the payment of loan collateral release premiums. At securitization the loan was secured by 73 properties. The remaining portfolio has geographic concentration in California's Silicon Valley with 17 properties representing 80% of the mortgage collateral by net rentable area (NRA) located in San Jose (12 properties -55%), Santa Clara (2 properties -- 11%), Sunnyvale (1 property - 9%), Fremont (1 property - 3%) and Palo Alto (1 property - 2%). The other five properties are located in Dallas (2 properties -- 10%), Los Angeles (2 properties -- 8%) and Seattle (1 property -- 2%).

As of the September 2010 rent rolls, the current loan collateral secured by first mortgage liens had a weighted average occupancy rate of 79% compared to 82% at Moody's last review and 89% at securitization. Additionally, the 77,944 square foot Casey Family Building in Seattle became vacant in January 2011 when its single tenant, Casey Family Programs, vacated upon its lease expiration. Including the Casey Family Building vacancy, the current occupancy for the mortgaged collateral is approximately 77%.

The San Jose office and R&D markets ended 2010 with vacancy rates exceeding 20%. Although the market experienced positive absorption in the 4th quarter it was preceded by several quarters of negative absorption that resulted in an increase in the vacancy rate. Although the market is beginning to show some improvement, Moody's expects that it will be some time before real estate fundamentals recover to pre-recession levels. Portfolio vacancy has increased since securitization and Moody's expects that for the next several quarters market fundamentals will put downward pressure on rental rates for new leases and lease renewals. The loan sponsor is the Blackstone Group. Moody's credit estimate for the pooled debt is Ba2 compared to Baa3 at last review.

The One Pepsi Way Loan ($40.0 million -- 12%) was transferred to special servicing in April 2010. The loan is secured by a 520,000 square foot office building in Somers, New York. The building was built in 1987 for the Pepsi Bottling Group (Pepsi) who leased 70% of the building through December 2010. Prior to Pepsi signing a five-year lease commencing in January 2011 for the entire building, the property was 79% leased to two tenants, Pepsi and General Motors. General Motors had not intended to renew its lease upon expiration in February 2011. Although the property is now 100% leased to Pepsi, the current rent is less than the previous rent paid by Pepsi and General Motors. The $55.0 million whole loan includes a $15.0 million non-trust junior component. There is also $22.0 million of mezzanine debt. The loan sponsor is Murray Hill Properties. Moody's LTV is greater than 100%, as it was at the last review.

The JER Denver Office Portfolio Loan ($38.6 million -- 12%) is secured by four office properties with a total of 726,240 square feet located in southeast suburban Denver, Colorado. Since securitization two properties containing 185,957 square feet were released from the loan collateral. Release premiums from the partial release have resulted in a 24% reduction in the outstanding loan balance. As of December 2010 the portfolio was 84% leased compared to 92% at securitization. The largest three tenants, Comcast, Time Warner Cable and Bellco Credit Union lease 48% of the total NRA. All three of these leases expire in 2015. Lease rollovers in 2011 account for 18% of total NRA. As of the 4th Quarter 2010 the Class A office market vacancy was 15%, projected to decline slightly over the next several years. The $66.6 million whole loan includes a $28.0 million non-trust junior component. The loan sponsor is JER Real Estate Partners III, L.P. and JER Real Estate Qualified Partners III, L.P. Moody's LTV is 96%, the same as at the last review.

The Bassett Place Mall Loan ($31.3 million -- 9%) is a modified loan that was extended to September 2011. The terms of the modification included a $750,000 principal pay down, a monthly excess cash reserve and a deferred management fee reserve. The B-Note holder was charged a 0.5% workout fee. The loan is secured by a 507,003 square foot regional retail mall located in El Paso, Texas. The mall is anchored by Target and Kohl's plus an 18-screen Premiere movie theater. The center is shadow anchored by Costco. As of December 2010 the in-line space was 77% leased, the same as at securitization. In-line sales for calendar year 2010 were $304 per square foot, compared to $273 per square foot at securitization. The $54.7 million whole loan includes a $23.4 million non-trust junior component. The loan sponsor is Christopher C. Maguire. Moody's LTV is 75% compared to 79% at last review.

The Ballantyne Village Loan ($31.5 million -- 9%) was transferred to special servicing in July 2009. The loan is a non-performing matured balloon loan. The loan was not extended since the last maturity date in January 2010. A forbearance structure has been approved subject to the Servicer's due diligence. 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 (5-screens) and the YMCA occupying 10,600 square feet. In-line space is approximately 77% leased compared to 75% at securitization. A large percentage of the tenants are in arrears on their rent. The $50.0 million whole loan includes a $31.5 million non-trust junior component. The loan sponsor is Robert Bruner. Moody's LTV is greater than 100%, the same as at last review.

The Lodgian Airport Hotels Loan ($9.4 million -- 3%) was transferred to special servicing in January 2011 due to imminent default. The loan matured on March 9, 2011. A pre-negotiation letter is in place with the borrower. The loan is secured by two airport hotels with a total of 492 rooms. The two hotels are the Crown Plaza Phoenix Airport (299 rooms) and the Crowne Plaza Pittsburgh International Airport (193 rooms). A partial release effective March 8, 2011 of the Radisson Phoenix Airport Hotel (159 rooms) resulted in a principal curtailment of $8.0 million. RevPAR for the year-to-date period ending November 2010 was $50 compared to $56 for the same period in 2009, an 11% decline. There is a $2.3 million non-trust junior secured component. The loan sponsor is Lodgian Hotels. Moody's LTV is greater than 100%, the same as last review.

REGULATORY DISLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, parties not involved in the ratings, public information, confidential and proprietary Moody's Investors Service information, and confidential and proprietary Moody's Analytics 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
Jay Rosen
Vice President - Senior Analyst
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 Downgrades Three 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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