Fitch Upgrades Four Classes of MSC 2011-C1
OREANDA-NEWS. Fitch Ratings has upgraded four classes and affirmed five classes of Morgan Stanley Capital I Trust (MSC) commercial mortgage pass-through certificates series 2011-C1. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The upgrades and affirmations are the result of ongoing transaction paydown, defeasance, and expected principal repayment upon maturity. As of the October 2015 distribution date, the pool's aggregate principal balance has been reduced by 38.1% to $958.4 million from $1.55 billion at issuance. Per the servicer reporting, six loans (6.4% of the pool) are defeased. Seven loans (9.4%) are set to mature in 2016.
Fitch modeled losses of 1.98% of the remaining pool. There have been no specially serviced loans since issuance. Interest shortfalls are currently affecting class M.
The largest loan in the pool (24%) is secured by Christiana Mall, a 1.1 million square foot (sf) regional mall (435,219 owned) located in Newark, DE. The mall is anchored by Macy's, JCPenney, Target, Nordstrom, and Barnes and Noble (all anchor-owned). Collateral tenants include Forever-21, H&M, Anthropologie, Victoria's Secret, and Apple. The mall is the largest in DE and benefits from the absence of a state sales tax. Servicer reported year-end sales figures show an increase from 2013 to 2014. Occupancy at the property remains stable and the servicer reported an increase in the debt service coverage ratio (DSCR) to 3.22x for year-end (YE) 2014 from 3.00x at YE 2013.
The second largest loan (11%) is secured by a portfolio of industrial properties and office buildings owned by W.P. Carey. The portfolio is geographically diverse, composed of 26 different distribution centers in various metros and four office properties in Raleigh, NC. The properties are 100% leased to General Parts International (GPI), with leases that extend past the loan's maturity to January 2033. The servicer reported an increase in the DSCR to 1.71x as of YE 2014 compared to 1.51x as of YE 2013.
The third largest loan (9%) is secured by the Hilton Times Square, a 460-key, full-service hotel located in Manhattan's Times Square. Hotel amenities include a restaurant and bar, 10 meeting rooms, a fitness center, a business center, and concierge service. The hotel maintains high occupancy rates and the servicer reported a DSCR of 2.80x for YE 2014. This reflects an increase when compared to the DSCR for YE 2013 of 2.43x.
RATING SENSITIVITIES
All of the classes have Stable Outlooks. Affirmations are likely in the near term. Should performance continue to improve further upgrades to classes C through F are possible. Downgrades are not likely unless there is significant deterioration in performance.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch has upgraded the following ratings:
--$60 million class B notes to 'AAAsf' from 'AAsf'; Outlook Stable;
--$89 million class C notes to 'AAsf' from 'Asf'; Outlook Stable;
--$85.2 million class D notes to 'Asf' from 'BBBsf'; Outlook Stable;
--$19.4 million class E notes to 'BBBsf' from 'BBB-sf'; Outlook Stable.
Fitch has affirmed the following ratings:
--$95 million class A-2 notes at 'AAAsf'; Outlook Stable;
--$105.1 million class A-3 notes at 'AAAsf'; Outlook Stable;
--$404 million class A-4 notes at 'AAAsf'; Outlook Stable;
--$13.5 million class F notes at 'BB+sf'; Outlook Stable;
--$15.9 million class G notes at 'BBsf'; Outlook Stable;
--$604 million* class X-A notes at 'AAAsf'; Outlook Stable.
*Notional Amount and interest only.
The class A-1 certificates have paid in full. Fitch does not rate the class H, J, K, L, M and X-B certificates.
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