Fitch Affirms One Class of Salomon Brothers 2001-MM

Business Wire

CHICAGO--(BUSINESS WIRE)--

Fitch Ratings affirms one class of Salomon Brothers Mortgage Securities VII, Inc. commercial mortgage pass through certificates, series 2001-MM. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmation is due to sufficient credit enhancement of the senior pooled class after consideration for expected losses from the remaining loans in the pool. As of the June 2013 distribution date, the pool's certificate balance has paid down 93.1% to $46.8 million from $674 million at issuance.

RATING SENSITIVITIES

The rated class D is expected to remain stable based on sufficient credit enhancement. It is anticipated the class will be paid in full from scheduled principal payments within the next three remittance periods.

There are three loans remaining in the pool, secured by two office properties (72%) and one retail property (28%).

Of the remaining loans, Trails Village Center and the Peace Corps Building have exhibited stable performance. The largest contributor to losses is the Stamford Square loan, representing 53% of the transaction, which is secured by a 295,801 square foot (sf) office property in Stamford, CT. Occupancy has declined significantly due to the largest tenant vacating at lease expiration and relocating its corporate headquarters to another location in Stamford. As of December 2012, occupancy of the building was 31%. Due to the softness of the market, no active prospects have emerged for the vacant space. The borrower has been funding shortfalls to keep the loan current.

The original 32 loans at issuance were divided into eight series, each of which consisted of four loans. The aggregate loan balance of each series is divided into a senior and junior portion. The senior portions are pooled and are represented by classes A-1 through D on an aggregate basis. The junior portions are not pooled, but provide credit support to each respective series. Principal paydowns are first applied toward the senior portion of each loan group. Only after the entire senior portion of each loan group is paid in full will the respective junior portions begin receiving principal payments. Losses are applied in reverse sequential order, first through each of the respective junior loan groups and then to the pooled portion of the transaction.

Fitch affirms the following class as indicated:

--$0.6 million class D at 'AAsf'; Outlook Stable.

Fitch does not rate classes E-1 through E-8, F-1 through F-8 and G-1 through G-8. Classes A-1, A-2, A-3, B and C have paid in full. Additionally, Fitch has withdrawn the rating of the interest only class X certificate.

Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 18, 2012 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. 18, 2012).

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=696969

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=793711

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Contact:
Fitch Ratings
Primary Analyst
David Ro, +1-312-368-3132
Associate Director
Fitch Ratings, Inc.
70 W. Madison St.
Chicago, IL 60602
or
Committee Chairperson
Chris Bushart, +1-212-908-0606
Senior Director
or
Media Relations
Sandro Scenga, New York, +1-212-908-0278
sandro.scenga@fitchratings.com
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