Fitch Ratings has downgraded five and affirmed six classes of Key Commercial Mortgage Securities Trust commercial mortgage pass-through certificates series 2007-SL1. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The downgrades reflect the highly concentrated nature of the pool with the substantial risk of adverse selection. Fitch expects high losses given the small loan balances and relatively high fixed costs of disposal. Within the next 15 months, all of the loans in the pool will have reached their maturity date with many reflecting weak credit metrics that will present challenges with refinancing. Fitch modeled losses of 21% of the remaining pool; expected losses on the original pool balance total 9%, including $12.5 million (5.3% of the original pool balance) in realized losses to date. Seventeen loans (64.1 %) are presently on the Servicer Watch List, which includes two specially serviced assets (5.9%).

As of the January 2015 distribution date, the pool's aggregate principal balance has been reduced by 85.9% to $33.4 million from $237.5 million at issuance. No loans are defeased. Interest shortfalls are currently affecting classes D through L.

The largest contributor to expected losses is secured by a 72,374 square foot (sf) mixed-use property (retail/self-storage) (17% of the pool) located in Kent, WA, which is approximately 20 miles south of Seattle. The debt service coverage ratio (DSCR) as of year-end (YE) 2014 was reported to be 0.71x which is a substantial decrease from the 0.97x reported at YE 2013. The loan has been operating below 1x since 2010 due to soft market conditions. The property occupancy has declined slightly to 95.7% as of YE 2014 from 100% at YE 2013. Additionally, it is worth noting that many of the leases, totaling 35.2% of net rentable area (NRA) were renewed in 2014. Rental revenue for this year may be understated as a result of abatements. The servicer commentary indicated recovering performance in 2015; however, no financials were provided.

The second largest contributor to expected losses is secured by a 13,775 sf retail property (7.8%) located in the downtown shopping district of Kirkland, WA. Occupancy was reported to be 100% as of YE 2014 with most of the boutique tenants on short-term leases. As of YE 2014, the DSCR was reported to be 1.03x which is slightly above YE 2013 DSCR of 0.93x. The modeled loss is the result of high lease-rollover risk. Four of the tenants reflect leases (32.3% of NRA) which expire prior to the February 2017 loan maturity. One tenant (3.5%) has recently vacated and another (19.7%) is operating month-to-month.

RATING SENSITIVITIES

The Negative Outlooks reflect the potential for further downgrade should underperforming loans not refinance and transfer to special servicing. Classes A-1A and A-2 are pari-passu with respect to losses. The A-1A class is a multi-family directed class which is supported by some of the worst-performing assets in the pool. The Distressed classes (those rated below 'B') may be subject to further downgrades as additional losses are realized or if losses exceed Fitch's expectations.

DUE DILIGENCE USAGE

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

Fitch downgrades the following classes and maintains Outlooks as indicated:

--$8.1 million class A-2 to 'BBsf' from 'BBBsf'; Outlook Stable;

--$9.7 million class A-1A to 'BBsf' from 'BBBsf'; Outlook Negative;

--$5.6 million class C to 'Csf' from 'CCsf'; RE 50%;

--$4.7 million class D to 'Dsf' from 'Csf'; RE 0%;

--$0 class E to 'Dsf' from 'Csf'; RE 0%.

Fitch affirms the following classes as indicated:

--$5.3 million class B at 'CCCsf'; RE 100%;

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

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

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

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

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

The class A-1 certificates have paid in full. Fitch does not rate the class L, R and LR certificates. Fitch previously withdrew the rating on the interest-only class X certificates.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=873395

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=998649

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=998649

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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.