Fitch Upgrades CSFB 2006-TFL2
OREANDA-NEWS. Fitch Ratings has upgraded two and affirmed three classes of Credit Suisse First Boston Mortgage Securities Corp., series 2006-TFL2. Since issuance, the transaction has been reduced by nearly 98% from paydown and dispositions. Only one loan, the JW Marriott Starr Pass, remains. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The upgrades are due to greater confidence in the recovery prospects of the JW Marriott Starr Pass loan. Since Fitch's last rating action, the special servicer has made progress with open legal cases, settling a key case surrounding land access and usage. While this resolution is a positive development, open litigation on other matters remains. The outstanding judgements need to be settled before the servicer can move forward with the foreclosure process.
The JW Marriott Starr Pass consists of a 575-room full service hotel and a 27-hole Arnold Palmer-designed championship golf course, located in Tucson, AZ. The hotel, which offers
88,000 square foot (sf) of meeting space, including a 20,000 sf ballroom, was opened in 2005 and maintains high curb appeal with well-kept landscaping and an attractive design.
In April 2010, the loan transferred to special servicing for imminent default. Performance did not meet expectations from issuance, and the recession hit the Southwest, specifically the Tucson market, particularity hard. Resort performance improved as the U. S. lodging market rebounded from recessionary lows, but workout momentum has not been successfully maintained due to the open legal disputes that have carried on for years. The resort remains well kept however and maintains high curb appeal.
RATING SENSITIVITIES
The ratings are expected to remain stable in the near term. Future upgrades are unlikely given the loan's defaulted status as well as limited financial information available at the time of the review. While recovery prospects have improved, further downgrades to the already distressed classes are possible if workout negotiations continue to stall.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch has upgraded the following classes:
--$949,356 class G to 'Asf' from 'BBBsf'; Outlook Stable;
--$20 million class H to 'BBBsf' from 'BBsf'; Outlook Stable.
Fitch affirms the following classes:
--$19 million class J at 'Bsf'; Outlook Stable;
--$22 million class K at 'CCCsf'; RE 60%;
--$16.1 million class L at 'Dsf'; RE 0%.
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