Fitch Affirms JP Morgan 2007-FL1
KEY RATING DRIVERS
The affirmations are due to the generally stable performance of the sole remaining loan in the trust.
Resorts International Portfolio currently consists of two of the original four hotel/gaming properties, Bally's Tunica and Resorts Tunica, located in Robinsonville and Tunica, MS. There are a total of 439 rooms. The properties' revenue is primarily generated from gaming; room revenue is only a small component of overall revenue. The loan was foreclosed on and the properties became real estate owned (REO) in November 2011. Collateral performance remains well below expectations from issuance. As of year-end (YE) 2014, Bally's was 39.8% occupied and Resorts 63.5%, respectively, compared to 88.6% and 90% at issuance. The servicer is working to stabilize the properties prior to marketing the assets for sale. Renovations at both properties have effectively been completed.
Fitch's analysis has factored in the properties' YE2014 cash flow performance, provided by the servicer, as well as the collateral quality of the properties, the competitive nature of the gaming industry and the struggling local market conditions. The whole loan consists of three pari passu A notes, the non-pooled rake components, and various subordinated notes. Only the A1 note and the non-pooled rake components are included in this transaction. Based on the most current valuations and market conditions, Fitch expects limited recoveries upon liquidation.
The special servicer is no longer advancing payments after an appraisal reduction deemed any future advances as non-recoverable. Interest shortfalls totaling \$9.6 million are affecting all classes, with the exception of the A1. Contrary to the order of priorities in most transactions, this deal calls for interest on prior shortfalls to be paid at the end of the waterfall.
RATING SENSIVITIES
Future downgrades to the distressed classes (below B) are possible as losses are realized.
Fitch affirms the following classes:
--\$9 million class F 'CCCsf'; RE100%;
--\$26 million class G at 'CCsf'; RE40%;
--\$35.7 million class H at 'Csf'; RE0%;
--\$32.5 million class J at 'Csf'; RE0%;
--\$10.3 million class K at 'Dsf'; RE0%.
--\$ 0 Class L at 'Dsf'; RE0%;
--\$11.9 million class RS-1 at 'Csf'; RE0%;
--\$12.8 million class RS-2 at 'Csf'; RE0%;
--\$15.6 million class RS-3 at 'Csf'; RE0%;
--\$11.1 million class RS-4 at 'Csf'; RE0%;
--\$15.4 million class RS-5 at 'Csf'; RE0%;
--\$13.2 million class RS-6 at 'Csf'; RE0%;
--\$7.6 million class RS-7 at 'Csf'; RE0%.
Classes A1, A2. B, C, D, E, and the interest-only class X-1 have paid in full. Fitch withdrew its rating on the interest-only class X-2 at prior review.
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