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Fitch Downgrades One Class of TIAA 2007-C4; Revises Outlook

January 24, 2014

NEW YORK --(BUSINESS WIRE)-- Fitch Ratings has downgraded one class and affirmed 17 classes of commercial mortgage pass-through certificates of TIAA Seasoned Commercial Mortgage Trust , series 2007-C4. In addition, Fitch has revised the Outlook on class E to Negative from Stable. A detailed list of rating actions follows at the end of this press release. KEY RATING DRIVERS The affirmations are due to overall stable pool performance since Fitch's last review. The downgrade of class F and the revised rating Outlook for class E are primarily due to an increase in expected losses on two of the top 15 loans. Fitch modeled losses of 12.12% of the remaining pool; expected losses on the original pool balance total 5.6%, including losses already incurred to date (1%). Fitch has identified 10 loans (20.7%) as Fitch loans of concern (LOC), which includes three specially serviced assets (12%). As of the January 2014 distribution date, the pool's aggregate principal balance has been reduced by 62.3% to $789.1 million from $2.09 billion at issuance. Currently, there is one defeased loan (0.5%). Interest shortfalls in the amount of $3.3 million are affecting classes K through T. RATING SENSITIVITY The ratings on all investment grade classes are expected to remain stable due to sufficient credit enhancement and continued paydown. Future downgrades on class E are possible if the outcome of the final resolution on the specially serviced assets results in lower than expected recoveries. The distressed classes (rated below 'B') may be subject to further rating actions as losses are realized. The largest contributor to expected losses consists of two pari-passu notes that are secured by two phases of a shopping center in Algonquin, IL (11% of the pool, collectively). The loans, which were cross collateralized and cross defaulted at issuance, were transferred to special servicing in August 2009 due to imminent default. The Phase I loan was modified and both loans returned to the master servicer as corrected mortgage loans in September 2010 . Ultimately, both loans were transferred back to special servicing in June 2012 due to imminent default. The loans are now over 90-days delinquent. The special servicer rejected a discounted payoff offer from the borrower, and a foreclosure complaint was recorded in December 2012 . A receiver has been appointed by the court. Foreclosure proceedings have not yet progressed due to ongoing litigation initiated by the special servicer. The servicer reported second-quarter (2Q) 2012 Debt Service Coverage Ratio (DSCR) for Phase I and Phase II were 0.67x and 0.89x, respectively. Per the November 2013 rent roll, Phase I was 88.8% occupied, compared to 97% at issuance; Phase II was 100% occupied, compared to 89.8% at issuance. The second largest contributor to expected losses is a loan secured by two adjacent office properties in Greenbelt, MD (2.6%). Both properties are expected to face a significant decline in rental revenue. Park East is an 84,630 square foot (SF) office building. Per the 2Q'2013 rent roll, the property was 96.7% occupied. The former largest tenant, University of Phoenix (which represented 22% of the property) vacated six month after its lease expiration date of Feb. 29, 2012 . A new tenant, Lancaster Bible College , took over the space effective March 2013 at a much lower rental rate ( $12 sf vs $27.14 sf). Although the tenant leases an additional 7% of the property at $24 sf, the total rental revenue is expected to decline significantly. The servicer reported 3Q'13 DSCR was 1.24x. Park West is an 84,581 sf office building. Per the 3Q'2013 rent roll, the property was 100% leased. The largest tenant, Bozzuto & Associates , occupies 88% of the property. The tenant's leases are scheduled to expire in August 2014 . Per the servicer, the tenant will vacate upon lease expiration. The servicer reported 3Q'13 DSCR was at 2.0x. The third largest contributor to expected losses is a loan secured by a 117,936 sf office property in White Plains, NY (1.5%). The loan transferred to special servicing in June 2009 for imminent default. A loan modification closed in June 2011 , splitting the loan into a $7.5 million interest-only A-note and a $4.2 million zero interest B-note. Fitch expects zero recovery on the $4.2 million B-note. The loan returned to the master servicer in January 2012 . Fitch downgrades the following class and assigns Recovery Estimates (REs) as indicated: -- $15.7 million class F to 'CCCsf' from 'Bsf'; RE 75%. Fitch affirms the following classes, revised Outlooks and Recovery Estimates (REs) as indicated: -- $324.7 million class A-3 at 'AAAsf'; Outlook Stable; -- $67.1 million class A-1A at 'AAAsf'; Outlook Stable; -- $227.5 million class A-J at 'AAsf'; Outlook Stable; -- $10.5 million class B at 'Asf'; Outlook Stable; -- $28.8 million class C at 'BBBsf'; Outlook Stable; -- $18.3 million class D at 'BBsf'; Outlook Stable; -- $5.2 million class E at 'BBsf'; Outlook to Negative from Stable; -- $20.9 million class G at 'CCCsf'; RE 0%; -- $13.1 million class H at 'CCsf'; RE 0%; -- $23.5 million class J at 'Csf'; RE 0%; -- $7.8 million class K at 'Csf'; RE 0%; -- $7.8 million class L at 'Csf'; RE 0%. -- $7.9 million class M at 'Csf'; RE 0%; -- $2.6 million class N at 'Csf'; RE 0%; -- $7.7 million class P at 'Dsf'; RE 0%. The class A-1 and A-2 certificates have paid in full. Classes Q and S have been depleted due to realized losses and remain at 'Dsf' RE 0%. Fitch does not rate the class T certificates. Fitch previously withdrew the rating on the interest-only class X certificates. Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 11, 2013 report, 'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria', which is available at ' www.fitchratings.com ' under the following headers: Structured Finance >> CMBS >> Criteria Reports Additional information is available at ' www.fitchratings.com '. Applicable Criteria and Related Research : --'Global Structured Finance Rating Criteria' ( May 24, 2013 ); --'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' ( Dec. 11, 2013 ). Applicable Criteria and Related Research : Global Structured Finance Rating Criteria http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661 U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724961 Additional Disclosure Solicitation Status http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=816983 ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS . IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE ' WWW.FITCHRATINGS.COM '. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Fitch Ratings Primary Analyst Amy Gan Director +1-212-908-9143 Fitch Ratings, Inc. One State Street Plaza New York, NY 10004 or Committee Chairperson Mary MacNeill Managing Director +1-212-908-0785 or Media Relations: Elizabeth Fogerty , +1-212-908-0526 ( New York ) elizabeth.fogerty@fitchratings.com Source: Fitch Ratings


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