Fitch Upgrades Two Classes of Protective Life 2007-PL
OREANDA-NEWS. Fitch Ratings has upgraded two classes and affirmed 16 classes of Protective Finance Corporation REMIC 2007-PL commercial mortgage pass-through certificates. A full list of rating actions follows at the end of this release.
KEY RATING DRIVERS
The upgrades are the result of increased credit enhancement as a result of amortization and prepayments since Fitch's last rating action. The affirmations are due to the transaction's overall stable performance. The ratings reflect a stressed analysis, which included increased cash flow haircuts, cap rates and default probabilities.
There were variances from criteria related to classes D through G where Fitch's surveillance criteria would indicate that upgrades are possible. However, further upgrades were not warranted based on the lack of updated financial information including occupancy information, the small balance nature of the loans, smaller class sizes, minimal upcoming maturities, high retail concentration with single tenant exposure, and properties located in tertiary markets.
As of the April 2016 distribution date, the pool's aggregate principal balance has been reduced by 70.3% to $301.6 million from $1.02 billion at issuance. There are currently 101 loans remaining of the original 199 with an average loan size of $2,985,833. No loans are defeased. There are currently no loans in special servicing. Interest shortfalls are currently affecting class S.
Approximately 99% of the pool is fully amortizing. The transaction has a high concentration of retail properties (71%), which include single tenant exposure. Upcoming maturities are minimal through 2017 with the larger maturity concentrations in 2025 (12.1%), 2026 (14.7%), and 2027 (11%).
The largest loan in the pool is secured by a 429,935 square foot (sf) retail power center located in Conway, AR. The largest tenants include Kohl's, Belk, TJ Maxx. The most recent servicer reported debt service coverage ratio (DSCR) is 2.34x as of year-end (YE) 2014. The property is 100% occupied per the December 2015 rent roll.
The Rating Outlook on classes A-1A through N remains Stable due to increasing credit enhancement and continued paydown and amortization. Further upgrades to classes D through K are possible with stable performance and continued increased credit enhancement. Upgrades to the junior classes are not likely due to the smaller class sizes, single tenant exposure and properties located in tertiary markets. Downgrades to junior classes are possible if performance declines significantly.
DUE DILIGENCE USAGE
No third-party due diligence was provided or reviewed in relation to this rating action.
Fitch has upgraded the following:
Protective Life 2007-PL
--$8.9 million class C to 'AAAsf' from 'AAsf'; Outlook Stable;
--$6.4 million class D to 'AAsf' from 'AA-sf'; Outlook Stable.
Fitch also affirmed the following ratings:
--$2 million class A-1A at 'AAAsf'; Outlook Stable;
--$101.6 million class A-M at 'AAAsf'; Outlook Stable;
--$102.9 million class A-J at 'AAAsf'; Outlook Stable;
--$5.1 million class B at 'AAAsf'; Outlook Stable;
--$7.6 million class E at 'A+sf'; Outlook Stable;
--$6.4 million class F at 'Asf'; Outlook Stable;
--$8.9 million class G at 'A-sf'; Outlook Stable;
--$7.6 million class H at 'BBB+sf'; Outlook Stable;
--$7.6 million class J at 'BBBsf'; Outlook Stable;
--$8.9 million class K at 'BBsf'; Outlook Stable;
--$5.1 million class L at 'Bsf'; Outlook Stable;
--$2.5 million class M at 'Bsf'; Outlook Stable;
--$2.5 million class N at 'B-sf'; Outlook Stable;
--$2.5 million class O at 'CCCsf'; RE 100%;
--$3.8 million class P at 'CCCsf'; RE 100%;
--$2.5 million class Q at 'CCCsf'; RE 100%.
The class A-1, A-2, A-3 and A-4 certificates have paid in full. Fitch does not rate the class S certificates. Fitch previously withdrew the rating on the interest-only class IO certificates.