OREANDA-NEWS. Fitch Ratings has affirmed all classes of Banc of America Commercial Mortgage Trust, commercial mortgage pass-through certificates series 2007-5 (BACM 2007-5). A full list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The affirmations reflect sufficient credit enhancement relative to Fitch modeled losses and the stable performance of the underlying collateral since the last rating action. Fitch modeled losses of 20.5% of the remaining pool; expected losses on the original pool balance total 18.5%, including $112.8 million (6.1% of the original pool balance) in realized losses incurred to date. Fitch has designated 22 loans (52.5% of the current pool) as Fitch Loans of Concern, which includes five specially serviced assets (11.3%).

As of the August 2016 distribution date, the pool's aggregate principal balance has been reduced by 39.7% to $1.12 billion from $1.86 billion at issuance. According to servicer reporting, nine loans (9%) are defeased. Cumulative interest shortfalls totaling $15.9 million are currently affecting classes D through J and classes O through S.

The three largest contributors to Fitch-modeled losses remain the same since the last rating action.

The largest contributor to Fitch-modeled losses is the Smith Barney Building loan (8.9% of pool), which is secured by a 10-story, 193,456 square foot (sf) office building located in the La Jolla submarket of San Diego, CA. According to the March 2016 rent roll, the property was 86.7% occupied; however, occupancy has since declined to approximately 83% when Pricespective, LLC (3.6% of net rentable area [NRA]) vacated at its March 2016 scheduled lease expiration. Additionally, another tenant, R R Donnelley & Sons Company (3.6%), will be vacating at its November 2016 lease expiration, which would drop occupancy below 80%.

Although new leases on approximately 15% of the NRA were executed in 2015, these occupancy gains were offset by Cassidy Turley downsizing (by nearly 7% of NRA) when its lease expired in February 2015 and StepStone Group (7%) vacating prior to its lease expiration. Cassidy Turley renewed and extended its lease on 10% of the NRA until April 2022. Upcoming rollover risk includes 13% in 2016 and 4% in 2017.

The sponsor continues to come out of pocket to cover debt service shortfalls; a practice the sponsor has consistently performed since the debt service shortfalls began in 2008. For the trailing-nine months ending March 31, 2016, the net operating income debt service coverage ratio (NOI DSCR) was 0.56x, compared to 0.71x for the trailing-twelve-month (TTM) June 2015 period, 0.62x (TTM June 2014), 0.35x (TTM June 2013), 0.32x (TTM June 2012), 0.29x (TTM June 2011), and 1.39x underwritten at issuance.

The next largest contributor to Fitch-modeled losses is the specially-serviced, Green Oak Village Place loan (5.4%), a 315,094 sf lifestyle center located in Brighton, MI, about 40 miles northwest of Detroit. The loan first transferred to special servicing in January 2009 for imminent default and was subsequently modified in November 2009. The borrower re-defaulted on the modified loan approximately two years later, and the loan was returned to the special servicer in March 2012. A foreclosure sale occurred in October 2014 and the borrower had a six month redemption period through April 2015, which was mutually extended to July 2015 to allow for negotiation of a new loan modification.

The loan was modified again in June 2015. Modification terms include a principal write-off of approximately $2.6 million, which restated the loan balance to $60.3 million. The loan was bifurcated into a $28 million A-1 note and a $32.3 million A-2 note and the maturity was extended to June 2016 with a one-year extension option. The sponsor injected approximately $2 million of new capital for tenant improvement and leasing commissions and funding of reserves and legal/title costs.

According to the May 2016 rent roll, the property was 75% occupied, compared to 74% in June 2015, 84% at year-end (YE) 2014, 83% at YE 2013, 89% at YE 2012 and 89% at YE 2011. The prior occupancy declines have been attributable to Old Navy (5.3% of NRA) vacating at the end of January 2015, Coldwater Creek (1.9%) vacating in July 2014 ahead of its September 2016 lease expiration, and DEB (2.3%) closing all its Michigan stores and vacating in March 2015 ahead of its January 2017 lease expiration.

Lease rollover is spread out over the next few years with 3% rolling in 2016, 9% in 2017, less than 1% in 2018 and 2% in 2019. The property's four largest tenants have all recently renewed their leases, including Dick's Sporting Goods for five years to 2022, Barnes & Noble for five years to 2022, DSW for 10 years to 2027, and Ulta Salon, Cosmetics & Fragrances for 10 years to 2026. In addition, a new 10-year lease with TJMaxx (7% of NRA), which is expected to open by the end of September 2016, helps to boost occupancy above 81%. The special servicer and borrower have agreed upon terms to modify the loan for a third time, which includes a two-year maturity date extension and two one-year extension options.

The third largest contributor to Fitch modeled losses is the Collier Center loan (12.9%), the largest loan in the pool, which is secured by the leasehold interest in a 24-story, 567,163 sf office tower located in downtown Phoenix, AZ. The property is part of a mixed-use development that consists of office, retail, and restaurants. According to the June 2016 rent roll, the property was 92% occupied, an improvement from 88% at YE 2015, 79% at YE 2014, 66% at YE 2013, 66% at YE 2012 and 80% at YE 2011. The drop in occupancy between 2011 and 2012 was primarily the result of the second largest tenant at issuance vacating at lease expiration. However, property occupancy has since improved over the past two years when two large new leases (17% of the NRA) were executed in 2014, one large new lease (10%) in 2015 and new leases on 6% of the NRA through the first half of 2016. Upcoming rollover risk includes approximately 7% in 2016 and 9% in 2017. The sponsor has been coming out of pocket to cover the shortfall since 2012. YE 2015 NOI DSCR was 0.84x, compared to 0.71x in 2014, 0.80x in 2013, 0.94x in 2012 and 1.11x in 2011.

RATING SENSITIVITIES

The Stable Rating Outlooks on classes A-4, A-1A and A-M reflect sufficient credit enhancement and expected continued paydown. Although credit enhancement on these classes has increased since the last rating action, a significant percentage of the pool (over 76%) matures in 2017, with the two largest loans having their sponsors cover debt service. Class A-M may be subject to negative rating migration should loans not refinance at maturity as expected; however, upgrades may also be possible for this class should credit enhancement increase as paydowns continue without further significant defaults. The distressed classes (those rated below 'Bsf') may be subject to further downgrades as additional losses are realized.

USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10

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

Fitch has affirmed the following ratings:

--$513 million class A-4 at 'AAAsf'; Outlook Stable;

--$163.2 million class A-1A at 'AAAsf'; Outlook Stable;

--$185.9 million class A-M at 'BBsf'; Outlook Stable;

--$139.4 million class A-J at 'CCsf'; RE 25%;

--$20.9 million class B at 'CCsf'; RE 0%;

--$13.9 million class C at 'CCsf'; RE 0%;

--$20.9 million class D at 'Csf'; RE 0%;

--$18.6 million class E at 'Csf'; RE 0%;

--$11.6 million class F at 'Csf'; RE 0%;

--$18.6 million class G at 'Csf'; RE 0%;

--$15 million 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%;

--$0 class P at 'Dsf'; RE 0%;

--$0 class Q at 'Dsf'; RE 0%.

The class A-1, A-2, A-3, and A-SB certificates have paid in full. Fitch does not rate the class S certificates. Fitch previously withdrew the rating on the interest-only class XW certificates.