NEW YORK--()--Fitch Ratings has downgraded four and affirmed 14 classes of GMAC Commercial Mortgage Securities, Inc., series 2005-C1 (GMACC 2005-C1), commercial mortgage pass-through certificates. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The downgrades reflect an increase in Fitch modeled losses across the pool, due to further deterioration of loan performance, most of which involves significantly higher losses on the specially serviced loans, as well as several loans in the top 15 with continued underperformance (16.1% of the remaining pool). Fitch modeled losses of 14% of the remaining pool; modeled losses of the original pool are 12.2%, including losses already incurred to date.
The super-senior and mezzanine 'AAA' classes have benefited from the significant deleveraging of the transaction, which has resulted in increased credit enhancement to these classes. As of the February 2013 distribution date, credit enhancements for the super-senior and mezzanine 'AAA' classes have improved to above 50% and 30%, respectively, compared to 30% and 20% at issuance.
Fitch has designated 34 loans (51.2%) as Fitch Loans of Concern, which includes 11 specially serviced loans (18.2%). Seven of the top 15 loans (28.1%) have been designated as Fitch Loans of Concern, six (26.2%) of which have Fitch stressed loan-to-values greater than 90%. These loans may experience difficulties refinancing at loan maturity.
As of the February 2013 distribution date, the pool's aggregate principal balance has been reduced by 47.7% of the original pool balance to $774.3 million from $1.598 billion at issuance due to a combination of principal repayment (42.3%) and realized losses (5.4%). Four loans (2.7%) have been fully defeased. Cumulative interest shortfalls totaling $9.6 million are currently affecting classes B through P. There is significant upcoming loan maturities as 67% of the remaining pool has a loan maturity date concentrated in 2015.
The largest contributors to modeled losses are three (12.7%) of the top 15 loans; two (5.2%) of which are currently specially serviced.
The largest contributor to modeled losses is a loan (7.5%) secured by a 321,041 square foot (sf) office property located in Las Vegas, Nevada. The loan was previously transferred to special servicing in April 2009 for imminent default due to a significant decrease in occupancy. In December 2010, the loan was restructured into an A and B note and the loan's maturity date was extended until 2020. The loan was subsequently returned to the master servicer and is currently performing under the terms of the modification. Fitch modeled a full loss on the B note portion of the loan.
For the first nine months of 2012, the debt service coverage ratio, on a net operating income basis, was 1.09x compared to 1.34x and 1.59x at YE 2011 and at issuance, respectively. The property has undergone significant lease-up, but occupancy still remains weak. As of September 2012, the property was 62.4% occupied, improving from the 41% and 48% reported at YE 2011 and YE 2010, respectively, but still remaining below the 96% reported at issuance. Throughout 2011 and 2012, multiple new leases, accounting for nearly 24% of the net rentable area (NRA), were signed, helping to drive up property occupancy.
According to REIS and as of the fourth quarter of 2012, the overall Las Vegas office market remains very weak with a metro vacancy of 26.2%. The property is located in the Northwest office submarket of Las Vegas, which is performing worse than the overall metro and reported a vacancy of 33.7%. The property faces near-term rollover risk as 14.8% of the NRA roll over the next three years.
The second largest contributor to modeled losses is a specially serviced loan (2.8%) secured by a 5,300-stall parking facility located at Bradley International Airport in Windsor Lock, Connecticut. The loan was transferred to special servicing because the operator of the facility filed for bankruptcy and rejected its lease in January 2010. The borrower has since entered into a new management agreement with another third party.
The loan was modified into an A and B note and the loan's maturity date was extended until 2016. The loan was supposed to be returned to the master servicer; however, the borrower defaulted on the terms of the modification because it was unable to satisfy the November 2011 (and subsequent) debt service payments. The borrower cited delays in property repairs and damages incurred during an October 2011 snowstorm that caused property occupancy and revenues to decline.
According to the special servicer, the borrower has requested an additional modification to allow time to work through the transitional period with a new brand and a new operator and to overcome damages and disruptions caused by the snowstorm. Legal counsel is dual tracking foreclosure, while negotiations with the borrower continue. The special servicer indicates that the borrower is remitting all net cash flow on a monthly basis.
The third largest contributor to modeled losses is a specially serviced loan (2.5%) secured by a 243,212 sf retail property located in Colorado Springs, Colorado. The loan was transferred to special servicing in June 2011 due to imminent default.
As of September 2012, the property was 39% occupied. The property's original anchor tenant (initially occupying nearly 26% of the NRA) vacated upon its lease expiration. This significantly impacted property cash flow as the tenant accounted for nearly one-third of the property's total rental income. The borrower indicated that it would submit a discounted payoff proposal; however, the special servicer has not received any offers to date. Foreclosure was filed in February 2013 and a sale date is projected for later in 2013.
Fitch has downgraded the following classes as indicated:
--$127.8 million class A-J to 'CCCsf' from 'BBsf'; RE 100%;
--$12 million class C to 'CCsf' from 'CCCsf'; RE 0%;
--$24 million class D to 'CCsf' from 'CCCsf'; RE 0%;
--$16 million class E to 'Csf' from 'CCsf'; RE 0%.
Additionally, Fitch has affirmed the following classes as indicated:
--$133.9 million class A-1A at 'AAAsf'; Outlook Stable;
--$22.1 million class A-3 at 'AAAsf'; Outlook Stable;
--$68.1 million class A-4 at 'AAAsf'; Outlook Stable;
--$157.4 million class A-5 at 'AAAsf'; Outlook Stable;
--$159.8 million class A-M at 'AAAsf'; Outlook Stable;
--$34 million class B at 'CCCsf'; RE 0%;
--$16 million class F at 'Csf'; RE 0%;
--$3.4 million 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%;
--$0 class L at 'Dsf'; RE 0%;
--$0 class M at 'Dsf'; RE 0%;
--$0 class N at 'Dsf'; RE 0%.
Classes A-1 and A-2 have paid in full. Fitch does not rate class P. Fitch had previously withdrawn the ratings on classes O, X-1, and X-2.
Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (June 6, 2012);
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 18, 2012).
Applicable Criteria and Related Research:
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
Global Structured Finance Rating Criteria