Ratings Lowered On 10 Classes From Seven U.S. CMBS Transactions Due To Interest Shortfalls

  • We lowered our ratings on eight classes to 'D (sf)' from six U.S. CMBS transactions due to accumulated interest shortfalls that we expect to remain outstanding for the foreseeable future.
  • In addition, we lowered two ratings from two transactions to 'CCC- (sf)' due to interest shortfalls we believe the classes will experience periodically until the liquidation of the specially serviced assets in the transactions.
NEW YORK (S&P Global Ratings) Sept. 5, 2019--S&P Global Ratings today lowered 
its ratings on ten classes of commercial mortgage pass-through certificates 
from seven U.S. commercial mortgage-backed securities (CMBS) transactions (see 
list).

We lowered our ratings on eight classes to 'D (sf)' due to accumulated 
interest shortfalls that we expect to remain outstanding for the foreseeable 
future. In addition, we lowered two ratings to 'CCC- (sf)' due to interest 
shortfalls we believe the classes will experience periodically until the 
liquidation of the specially serviced assets in the transactions. 

The recurring interest shortfalls for the certificates are primarily due to 
one or more of the following factors:
  • Appraisal subordinate entitlement reduction (ASER) amounts in effect for specially serviced assets;
  • The lack of servicer advancing for loans or assets where the servicer has made nonrecoverable advance declarations;
  • Interest rate modifications or deferrals, or both, related to corrected mortgage loans;
  • The recovery of prior servicing advances; or
  • Special servicing fees.
Our analysis primarily considered the ASER amounts based on appraisal 
reduction amounts (ARAs) calculated using recent Member of the Appraisal 
Institute (MAI) appraisals. We also considered servicer-nonrecoverable advance 
declarations and special servicing fees that are likely, in our view, to cause 
recurring interest shortfalls.

The servicer implements ARAs and resulting ASER amounts according to each 
transaction's terms. Typically, these terms call for an ARA equal to 25% of 
the loan's stated principal balance to be implemented when it is 60 days past 
due and an appraisal or other valuation is not available within a specified 
time frame. We primarily considered ASER amounts based on ARAs calculated from 
MAI appraisals when deciding which classes from the affected transactions to 
downgrade to 'D (sf)'. This is because ARAs based on a principal balance 
haircut are highly subject to change, or even reversal, once the special 
servicer obtains the MAI appraisals. 

Servicer-nonrecoverable advance declarations can prompt shortfalls due to a 
lack of debt-service advancing, the recovery of previously made advances after 
an asset was deemed nonrecoverable, or the failure to advance trust expenses 
when nonrecoverable declarations have been determined. Trust expenses may 
include, but are not limited to, property operating expenses, property taxes, 
insurance payments, and legal expenses.

Discussions of the individual transactions follow:

Bear Stearns Commercial Mortgage Securities Trust 2007-TOP28 

We lowered our rating to 'D (sf)' on the class C commercial mortgage 
pass-through certificates to reflect accumulated interest shortfalls that we 
expect to be outstanding for the foreseeable future. The class C certificates 
currently have accumulated interest shortfalls outstanding for six consecutive 
months. We believe that the interest shortfalls will continue and accumulated 
interest shortfalls will remain outstanding until the resolution of the sole 
specially serviced asset, Charleston Town Center.

According to the Aug. 13, 2019, trustee remittance report, the current monthly 
interest shortfalls from the collateral totaled $438,051 and resulted from 
interest not advanced due to nonrecoverable determination on the specially 
serviced asset.

The current reported interest shortfalls have affected all classes subordinate 
to and including class C.

GE Commercial Mortgage Corp. series 2005-C4 

We lowered our ratings to 'D (sf)' on the class AJ and B commercial mortgage 
pass-through certificates to reflect accumulated interest shortfalls that we 
expect to be outstanding for the foreseeable future. The class AJ and B 
certificates currently have accumulated interest shortfalls outstanding for 
three consecutive months. We believe that both classes will continue to 
experience shortfalls and accumulated interest shortfalls will remain 
outstanding for a prolonged period until the resolution of the specially 
serviced assets.

According to the Aug. 12, 2019, trustee remittance report, the current monthly 
interest shortfalls from the collateral totaled $518,535 and resulted 
primarily from:

  • Interest not advanced due to a nonrecoverable determination of $243,533;
  • Special servicing fees totaling $28,925;
  • ASER amounts totaling $214,271; and
  • An interest rate modification of $31,806.
The current reported interest shortfalls have affected all classes subordinate 
to and including class AJ, with class AJ receiving partial interest payments. 

JPMorgan Chase Commercial Mortgage Securities Trust 2006-LDP8

We lowered our rating to 'CCC- (sf)' on the class E commercial mortgage 
pass-through certificates to reflect periodic interest shortfalls we expect 
this class to experience. Class E recovered all of its accumulated interest 
shortfalls in the month of August from the sale of a specially serviced asset. 
However, we believe the class is susceptible to periodic interest shortfalls 
until the resolution of the specially serviced assets in the transaction. 

According to the Aug. 15, 2019, trustee remittance report, the trust reported 
a net interest recovery this period of $3,525,812, of which classes E, F, and 
X recovered prior interest shortfalls totalling $3,400,038. The net recoveries 
this month resulted primarily from the liquidation of the Bonneville Square 
asset from the trust. Ongoing interest shortfalls will result primarily from: 

  • Interest not advanced due to nonrecoverable determination of $94,263; and
  • Special servicing fees of $3,788.
JPMorgan Chase Commercial Mortgage Securities Trust 2007-CIBC20

We lowered our rating to 'D (sf)' on the class E commercial mortgage 
pass-through certificates to reflect accumulated interest shortfalls that we 
expect to be outstanding for the foreseeable future. The class E certificates 
currently have accumulated interest shortfalls outstanding for five 
consecutive months. In addition, we expect this class to experience principal 
loss upon the ultimate liquidation of the specially serviced assets. 

According to the Aug. 12, 2019, trustee remittance report, the current monthly 
interest shortfalls from the collateral totaled $394,601 and resulted 
primarily from:
  • Interest not advanced due to a nonrecoverable determination of $169,345;
  • An interest rate modification of $136,348;
  • Special servicing fees totaling $19,827;
  • Workout fees of $647; and
  • Reimbursement of prior advances to the servicer totaling $68,434.
The current reported interest shortfalls have affected all classes subordinate 
to and including class E.


Merrill Lynch Mortgage Trust 2005-MCP1

We lowered our rating to 'D (sf)' on the class F commercial mortgage 
pass-through certificates to reflect accumulated interest shortfalls that we 
expect to be outstanding for the foreseeable future. The class F certificates 
currently have accumulated interest shortfalls outstanding for seven 
consecutive months. We believe that the interest shortfalls will continue and 
accumulated interest shortfalls will remain outstanding until the resolution 
of the specially serviced asset.

According to the Aug. 12, 2019, trustee remittance report, the current monthly 
interest shortfalls from the collateral totaled $165,564 and resulted 
primarily from:
  • Interest not advanced due to a nonrecoverable determination of $129,993;
  • Special servicing fees totaling $5,963;
  • Interest paid to the servicer for prior advances amounting to $17,968; and
  • Reimbursement of prior advances to the servicer totaling $11,640.
The current reported interest shortfalls have affected all classes subordinate 
to and including class F.


Merrill Lynch Mortgage Trust 2008-C1

We lowered our rating to 'D (sf)' on the class H commercial mortgage 
pass-through certificates to reflect accumulated interest shortfalls that we 
expect to be outstanding for the foreseeable future. At the same time, we also 
lowered our rating to 'CCC- (sf)' on the class G certificates to reflect 
periodic interest shortfalls we expect this class to experience. The class G 
and H certificates currently have accumulated interest shortfalls outstanding 
for eight consecutive months. However, class G may experience the near-term 
repayment of its outstanding interest shortfalls upon the liquidation of one 
specially serviced asset, while we believe that the interest shortfalls on 
class H will continue and the accumulated interest shortfalls will remain 
outstanding for a prolonged period.

According to the Aug. 14, 2019, trustee remittance report, the current monthly 
interest shortfalls from the collateral totaled $178,452 and resulted 
primarily from:

  • Interest not advanced due to a nonrecoverable determination of $171,972; and
  • Special servicing fees totaling $6,480.
The current reported interest shortfalls have affected all classes subordinate 
to and including class G.

Wachovia Bank Commercial Mortgage Trust series 2007-C34 

We lowered our ratings to 'D (sf)' on the class E and F commercial mortgage 
pass-through certificates to reflect accumulated interest shortfalls that we 
expect to be outstanding for the foreseeable future. The class E and F 
certificates currently have accumulated interest shortfalls outstanding for 10 
consecutive months. We believe that the interest shortfalls on both the 
classes will continue and the accumulated interest shortfalls will remain 
outstanding for a prolonged period.

According to the Aug. 16, 2019, trustee remittance report, the current monthly 
interest shortfalls from the collateral totaled $424,298 and resulted 
primarily from:

  • Interest not advanced due to a nonrecoverable determination of $658,043;
  • Special servicing fees totaling $31,456;
  • Interest paid to the servicer for prior advances amounting to $9,384; and
  • Net ASER recovery of $274,586 that offsets the shortfalls.
The current reported interest shortfalls have affected all classes subordinate 
to and including class D.
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