OREANDA-NEWS. Fitch Ratings has affirmed all classes of Citigroup Commercial Mortgage Trust, commercial mortgage pass-through certificates, series 2006-C5 (CGCMT 2006-C5). A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS
The affirmation reflects the relatively stable performance of the collateral pool since Fitch's last rating action. Fitch modeled losses of 13.1% of the remaining pool; expected losses on the original pool balance total 14.6%, including $117.4 million (5.5% of original pool balance) in realized losses to date. Fitch has designated 55 loans (33.8% of current pool balance) as Fitch Loans of Concern, which includes 16 specially serviced loans (17.2%). Ten of the assets in special servicing are real-estate owned (REO; 5.4%).

As of the January 2016 distribution date, the pool's aggregate principal balance has been reduced by 30.8% to $1.47 billion from $2.12 billion at issuance. There are 166 loans remaining in the pool, compared to 208 loans at issuance. According to servicer reporting, 17 loans (21.4%) have been defeased, including the second and third largest loans, which account for 8.2% and 6.8% of the current pool, respectively. Total defeasance has increased from just one loan (8.2%) since the last rating action. Cumulative interest shortfalls totaling $10.3 million are currently affecting classes B through K and classes M through P.

The largest contributor to Fitch-modeled losses, which remains the same since the last rating action, is the IRET Portfolio (8.4% of pool). The loan, which was transferred to special servicing in July 2014 for imminent default, is secured by a portfolio of nine suburban office properties totaling approximately 937,000 square feet (sf) located in the Omaha, NE metropolitan statistical area (MSA) (four properties); the greater Minneapolis, MN MSA (two), the St. Louis, MO MSA (two), and Leawood, KS (one).

As of the September 2015 rent roll, the overall portfolio occupancy declined to 83.5% from 87.4% at Fitch's last rating action as of October 2014. Individual property occupancies ranged from 24.6% to 100%. Current portfolio occupancy represents a significant decline from the above-90% occupancy reported during 2010 and early 2011 and the 95.7% reported at issuance. Occupancy declined drastically between 2010 and 2012 when three of the portfolio's largest tenants either vacated or downsized at their scheduled lease expiration.

The majority of the portfolio occupancy decline since the last rating action was associated with Hewlett Packard (HP) downsizing at the Farnam Executive Center property in Omaha, NE. Occupancy at this property declined to 24.6% from 63.9% as a result of HP downsizing its square footage by nearly 40%. However, HP extended its lease on 23% of that property's net rentable area (NRA) to July 2018 from July 2015.

Upcoming near-term rollover risk remains significant over the next two years with 17% of the portfolio square footage rolling in 2016 and 22% in 2017. According to REIS and as of third quarter 2015, the underlying property submarkets reported high vacancies ranging between 10.4% and 27.3%. The weighted average portfolio in-place base rent is approximately $19 per square foot (psf) compared to REIS-reported submarket asking rents ranging between $15 and $25 psf. According to the special servicer, a deed-in-lieu appears to be the likely workout strategy for the loan.

The next largest contributor to Fitch-modeled losses is the specially serviced, North Campus Crossing Phase I loan (1.7%). North Campus Crossing is an off-campus student housing property which mainly caters to students at East Carolina University, located in Greenville, NC. The property was built in two phases. Phase I, which serves as loan collateral, consists of 876 beds, while Phase II consists of 816 beds. The loan was transferred to special servicing in November 2015 due to imminent default. The borrower's representative advised the lender that the borrower would not be able to refinance the loan at the September 2016 maturity date. As of the January 2016 distribution date, the loan is 30 days delinquent as the borrower failed to make the December 2015 debt service payment.

As of the October 2015 rent roll, the property was 63.1% occupied, which is down from 95% at issuance. The debt service coverage ratio has fallen below 1x since 2007 due to declining rental rates, declining and low occupancy, as well as high operating expenses. The property suffers from increased competition within the Greenville market and as a result, the borrower has offered concessions in order to attract new tenants and maintain occupancy. In 2014, electricity was included with rent at no additional cost, which caused utility expenses to rise during the year. New leases have also been renewed at lower rates from the prior years, causing base rent to decrease. Net operating income in 2014 is down 20% from 2013 and down nearly 50% from issuance. According to the special servicer, the lender has retained legal counsel and is proceeding with foreclosure. The special servicer indicated a possible note sale may occur in the upcoming months.

The third largest contributor to Fitch-modeled losses is the REO Northmont Business Park asset (1.1%). The loan was transferred to special servicing in October 2012 for imminent default. The asset became REO in May 2014. The asset consists of three, single-story industrial flex buildings, totaling 229,726 sf located in Duluth, GA. As of the December 2015 rent roll, the property was 62.6% leased, but 60.1% occupied. One tenant, Polaris Laboratories LLC (2.4% of NRA), is dark. This compares to 67.5% occupied one year earlier and 88% at issuance. Near-term lease rollover risk consists of 10.9% of the NRA in 2016 and 5.7% in 2017. According to the special servicer, the asset is scheduled for auction in the upcoming spring.

RATING SENSITIVITIES
The Rating Outlooks on the super senior 'AAAsf' classes remain Stable due to these classes' seniority, increasing credit enhancement and expected continued paydown.

The Rating Outlook on class A-M was revised to Stable from Negative to reflect increased defeasance and lower expected losses on the overall pool due to better recoveries than previously modeled on loans disposed since the last rating action.

Distressed classes (those rated below 'Bsf') may be subject to downgrades as losses are realized or if realized losses are greater than Fitch's expectations Conversely, class A-J may be upgraded if recoveries on the specially serviced assets, especially the IRET Portfolio, are better than expected.

DUE DILIGENCE USAGE
No third-party due diligence was provided or reviewed in relation to this rating action.

Fitch has affirmed and revised Rating Outlooks on the following classes as indicated:

--$765.3 million class A-4 at 'AAAsf'; Outlook Stable;
--$184.2 million class A-1A at 'AAAsf'; Outlook Stable;
--$212.4 million class A-M at 'Asf'; Outlook to Stable from Negative;
--$172.6 million class A-J at 'CCsf'; RE 75%;
--$42.5 million class B at 'Csf''; RE 0%;
--$21.2 million class C at 'Csf'; RE 0%;
--$26.5 million class D at 'Csf'; RE 0%;
--$29.2 million class E at 'Csf'; RE 0%;
--$15.3 million class F at 'Dsf'; RE 0%;
--$0 class G at 'Dsf'' RE 0%;
--$0 class H at 'Dsf'' RE 0%;
--$0 class J at 'Dsf'' RE 0%;
--$0 class K at 'Dsf'' RE 0%;
--$0 class L at 'Dsf'' RE 0%;
--$0 class M at 'Dsf'' RE 0%;
--$0 class N at 'Dsf'' RE 0%;
--$0 class O at 'Dsf'' RE 0%.

Classes A-1, A-2, A-3, A-SB, AMP-1, AMP-2, and AMP-3 have paid in full. Fitch previously withdrew the ratings on the interest-only class XP and XC certificates. Fitch does not rate class P.