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Rating Action:

Moody's Upgrades Three, Affirms 14, and Downgrades One IO Class of JPMCC 2007-FL1

27 Feb 2014

Approximately $399 million of structured securities affected

New York, February 27, 2014 -- Moody's Investors Service upgraded the ratings on three classes, affirmed the ratings on 14 classes, and downgraded the rating on one IO class of JP Morgan Chase Commercial Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2007-FL1. Moody's rating action is as follows:

Cl. A-2, Upgraded to A2 (sf); previously on Sep 19, 2013 Affirmed Baa1 (sf)

Cl. B, Upgraded to A3 (sf); previously on Sep 19, 2013 Affirmed Baa2 (sf)

Cl. C, Upgraded to Baa1 (sf); previously on Sep 19, 2013 Affirmed Baa3 (sf)

Cl. D, Affirmed B1 (sf); previously on Sep 19, 2013 Downgraded to B1 (sf)

Cl. E, Affirmed Caa1 (sf); previously on Sep 19, 2013 Downgraded to Caa1 (sf)

Cl. F, Affirmed Caa2 (sf); previously on Sep 19, 2013 Downgraded to Caa2 (sf)

Cl. G, Affirmed Caa3 (sf); previously on Sep 19, 2013 Downgraded to Caa3 (sf)

Cl. H, Affirmed C (sf); previously on Sep 19, 2013 Downgraded to C (sf)

Cl. J, Affirmed C (sf); previously on Sep 19, 2013 Affirmed C (sf)

Cl. K, Affirmed C (sf); previously on Sep 19, 2013 Affirmed C (sf)

Cl. RS-1, Affirmed C (sf); previously on Sep 19, 2013 Affirmed C (sf)

Cl. RS-2, Affirmed C (sf); previously on Sep 19, 2013 Affirmed C (sf)

Cl. RS-3, Affirmed C (sf); previously on Sep 19, 2013 Affirmed C (sf)

Cl. RS-4, Affirmed C (sf); previously on Sep 19, 2013 Affirmed C (sf)

Cl. RS-5, Affirmed C (sf); previously on Sep 19, 2013 Affirmed C (sf)

Cl. RS-6, Affirmed C (sf); previously on Sep 19, 2013 Affirmed C (sf)

Cl. RS-7, Affirmed C (sf); previously on Sep 19, 2013 Affirmed C (sf)

Cl. X-2, Downgraded to Caa2 (sf); previously on Sep 19, 2013 Affirmed B3 (sf)

RATINGS RATIONALE

Moody's has upgraded the ratings on the three most senior P&I classes due to loan payoffs, loan paydowns and improving operating performance on two of the three remaining loans in the pool. Moody's has affirmed the ratings on 14 P&I classes even though the transaction's key metrics, including Moody's loan-to-value (LTV) ratio and Moody's stressed debt service coverage ratio (DSCR), improved with loan pay offs since last review. This is largely due to outstanding interest shortfalls to all outstanding classes as well as a high probability of the pool having greater exposure to the Resorts International Loan in the future. The downgrade of the interest only (IO) class is based on the decline in the credit quality of the referenced classes due to the payoff of highly rated classes.

FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING

The performance expectations for a given variable indicate Moody's forward-looking view of the likely range of performance over the medium term. Performance that falls outside the given range can indicate that the collateral's credit quality is stronger or weaker than Moody's had previously expected.

Factors that could lead to an upgrade of the ratings include a significant amount of loan paydowns or amortization, an increase in defeasance in the pool or an improvement in pool performance.

Factors that could lead to a downgrade of the ratings include a decline in the performance of the pool, an increase in loan concentration, an increase in expected losses from specially serviced and troubled loans or interest shortfalls.

METHODOLOGY UNDERLYING THE RATING ACTION

The principal methodology used in this rating was "Moody's Approach to Rating CMBS Large Loan/Single Borrower Transactions," published in July 2000. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

DESCRIPTION OF MODELS USED

Moody's review incorporated the use of the excel-based Large Loan Model v 8.6. 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. Moody's also further adjusts these aggregated proceeds for any pooling benefits associated with loan level diversity and other concentrations and correlations.

DEAL PERFORMANCE

As of the February 18, 2014 Payment Date, the transaction's aggregate certificate balance has decreased by 78%, to $399 million from $1.8 billion at securitization. The certificates are collateralized by three mortgage loans. A total of 19 loans, including three since last review, have paid off. The Certificates are collateralized by three floating-rate loans ranging in size from 24% to 39% of the pooled trust mortgage balance.

The pool has experienced $53.7 million of losses to date affecting Classes K and L due to the liquidation of three loans. In addition, interest shortfalls totaling $6.6 million affect all the pooled Classes as well as rake classes associated with the Resort International Loan. In addition, there are outstanding advances totaling $1.9 million.

Moody's weighed average pooled LTV ratio is 196% compared to 145% at last review and 62% at securitization. Moody's pooled stressed DSCR is 1.23X, compared to 1.35X at last review and 1.86X at securitization.

The largest loan, the PHOV Portfolio loan ($123 million, 39% of the pooled balance), is secured by eight full-service hotels with 1,992 guest rooms located in California (3 properties), Louisiana (2 properties), Florida (2 properties), and Illinois (1 property). Two New Jersey properties (DoubleTree Hotel & Executive Meeting Center and Hilton Hotel East Brunswick ) were released from the pool in July 2013, and Courtyard at USC was released in February 2014. Forbearance was completed in September 2012, including maturity extension through July 2014, and a full cash trap. The loan has an additional B note and new mezzanine loan held outside of the trust.

The portfolio's net operating income (NOI) for the year-to-date November 2013 was $18.9 million, up 23% from the same period in 2012. In particular, the two Louisiana properties (Marrott Metairie and Maison Dupuy) showed significant increases in performance benefitting from capital expenditure projects by the current sponsor. Moody's current pooled LTV is 75%. Moody's credit assessment is B1, compared to B2 at the last review.

The second largest pooled exposure, the Resorts International loan ($114 million, 37% of pooled balance plus $88 million non-pooled, rake balance) is secured by two hotel/casinos with a total of 439 rooms: the Bally's Tunica (Robinsonville, Mississippi) and Resorts Tunica (Tunica, Mississippi). There is pari passu interest of $61.3 million plus junior debt held outside of the trust. In July 2009, the portfolio was transferred to special servicing due to payment default. Both the Bally's Tunica and the Resorts Tunica are REO as of November 2011.

The loan's net cash flow (NCF) for 2013 was $12.3 million, down 35% from 2012. The July 2013 appraisals value the two properties at $78.5 million on as-is basis. Moody's anticipates a significant loss on this loan and Moody's credit assessment is C, the same as last review. Non-pooled Classes RS-1, RS-2, RS-3, RS-4, RS-5, RS-6, and RS-7 are secured by the junior portion of the Resorts International Portfolio Loan.

The third loan in the pool is the Sofitel Chicago Water Tower loan ($75 million, 23% of the pooled balance), is secured by a 415-room full-service hotel located one block from the Magnificent Mile in Chicago. The loan was transferred to special servicer in June 2012 for maturity default. The Blackstone Group is the new sponsor, and a forbearance agreement extended the maturity date to July 2014. Both the junior debt as well as the mezzanine debt were extinguished.

The property's net cash flow (NCF) for the year-to-date September 2013 was $11.9 million, compared to $8.1 million achieved in calendar year 2012. Moody's current pooled LTV is 87%. Moody's credit assessment is B3 compared to Caa3 at last review.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions of the disclosure form.

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

The analysis includes an assessment of collateral characteristics and performance to determine the expected collateral loss or a range of expected collateral losses or cash flows to the rated instruments. As a second step, Moody's estimates expected collateral losses or cash flows using a quantitative tool that takes into account credit enhancement, loss allocation and other structural features, to derive the expected loss for each rated instrument.

Moody's did not use any stress scenario simulations in its analysis.

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

EunJee Park
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Sandra Ruffin
VP - Senior Credit Officer
Structured Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Upgrades Three, Affirms 14, and Downgrades One IO Class of JPMCC 2007-FL1
No Related Data.
© 2019 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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