Fitch Affirms FUNB 2001-C3; Assigns Outlooks & LS Ratings

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed and assigned Rating Outlooks and Loss Severity (LS) ratings to First Union National Bank Commercial Mortgage Trust's (FUNBC) commercial mortgage pass-through certificates, series 2001-C3. A detailed list of rating actions follows the end of this release.

The affirmations are due to stable performance and defeasance, along with limited Fitch expected losses upon disposition of specially serviced assets along with expected losses from Fitch's prospective review of potential stresses. Fitch expects losses of 1.2%, or $6.9 million from loans in special servicing and loans that cannot refinance at maturity based on Fitch's refinance. These losses will be absorbed by the class not rated by Fitch. The majority of Fitch's expected losses are associated with loans currently in special servicing.

As of the March 2010 distribution date, the pool's certificate balance has paid down 31.6% to $560.2 million from $818.8 million at issuance. Of the remaining 106 loans, 27 (37.2%) have defeased and 68 have anticipated repayment dates (ARD) or maturity dates within 10 months. The weighted average coupon (WAC) of the loans with upcoming maturities is 7.45%.

There are three specially serviced loans in the pool (2%). One loan is in foreclosure, one is delinquent and one is real estate owned (REO).

The largest specially serviced asset (0.8%) is a 129,400 square foot (sf) industrial building located in Warren, MI. The loan transferred to special servicing in October 2009 and the special servicer is pursuing foreclosure. As of Hune, the net operating income (NOI) debt service coverage ratio (DSCR) was 0.99 with an occupancy of 72%.

The second largest specially serviced asset (0.7%) is a 55,674 sf office building located in Addison, TX. The loan transferred in August 2008 and was REO as of April 2009. The property is 64.9% occupied and is the headquarters for Mattress Giant. The special servicer is preparing to list the property for sale.

Fitch stressed the cash flow of the remaining non defeased loans by applying a 10% reduction to 2008 fiscal year end net operating income and applying an adjusted market cap rate between 7.5% and 10% to determine value.

Similar to Fitch's prospective analysis of recent vintage CMBS, each loan also underwent a refinance test by applying an 8% interest rate and 30-year amortization schedule based on the stressed cash flow. Loans that could refinance to a DSCR of 1.25x or higher were considered to payoff at maturity. Of the non-defeased or non-specially serviced loans, two loans (0.4% of the pool) incurred a loss when compared to Fitch's stressed value.

Fitch has affirmed, assigned Outlooks and LS ratings to the following classes:

-- $380.6 million class A-3 at 'AAA/LS1'; Outlook Stable;
-- Interest-only classes IO-I and IO-II at 'AAA'; Outlook Stable;
-- $33.8 million class B at 'AAA/LS3'; Outlook Stable;
-- $12.3 million class C at 'AAA/LS3'; Outlook Stable;
-- $23.5 million class D at 'AAA/LS3'; Outlook Stable;
-- $11.3 million class E at 'AAA/LS3'; Outlook Stable;
-- $12.3 million class F at 'AAA/LS3'; Outlook Stable;
-- $12.3 million class G at 'AAA/LS3'; Outlook Stable;
-- $12.3 million class H at 'AAA/LS3'; Outlook Stable;
-- $18.4 million class J at 'A/LS3'; Outlook Negative;
-- $14.3 million class K at 'BBB/LS3'; Outlook Negative;
-- $6.1 million class L at 'BBB-/LS4'; Outlook Negative;
-- $4.1 million class M at 'BB+/LS5'; Outlook Negative;
-- $6.1 million class N at 'BB/LS5'; Outlook Negative;
-- $4.1 million class O at 'B-/LS5'; Outlook Negative.

Fitch does not rate the $22.5 million class P.

Additional information on Fitch's amended criteria for analyzing recent vintage U.S. CMBS is available in the July 7, 2009 report, 'Surveillance Methodology for Recent Vintage U.S. CMBS,' which is available at 'www.fitchratings.com' under the following headers:

Structured Finance >> CMBS >> Criteria Reports

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

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