CHICAGO--(BUSINESS WIRE)--Fitch Ratings has assigned the following ratings and Rating Outlooks to the Aventura Mall Trust 2013-AVM commercial mortgage pass-through certificates:
--$747,000,000 class A 'AAAsf'; Outlook Stable;
--$138,000,000 class B 'NR';
--$101,000,000 class C 'NR;
--$94,000,000 class D 'NR';
--$120,000,000 class E 'NR'.
Although Fitch assigned expected ratings to classes X-A and X-B, they are no longer part of the final structure of this transaction and have been withdrawn.
The certificates represent the beneficial ownership in the trust, the primary asset of which is one loan having an aggregate principal balance of approximately $1.2 billion as of the cutoff date and secured by the Aventura Mall, a 2.1 million sf (collateral consisting of approximately 1 million sf of space owned by the borrower and approximately 900,000 sf of space on ground leases to anchor tenants) super-regional mall located in Aventura, FL. The property is anchored by Bloomingdales, Macy's Home & Men, Macy's, Nordstrom, (all on ground leases), Sears (non-owned) and JC Penney. The collateral is approximately 99.8% leased by over 230 tenants. As of the trailing 12 months ended August 2013, the mall reported comparable in-line sales and occupancy costs of $1,750 psf and 9.3%, respectively. The loan was originated by JP Morgan Chase Bank, National Association, German American Capital Corporation, Morgan Stanley Mortgage Capital Holdings LLC and Wells Fargo Bank, National Association.
KEY RATING DRIVERS
Strong Asset Quality: The property received a Fitch property quality grade of 'A'. The interior of the mall is in above-average condition, with the sponsors having spent $131 million on the renovation and expansion completed in 2008, adding the 167,000-sf Nordstrom, 160,392 sf of in-line space and a four-level parking structure. The mall is surrounded by affluent residential neighborhoods such as Turnberry Isle, Porto Vita and Waterways of Biscayne Bay.
Outstanding Sales: Aventura Mall features a diverse tenant mix that generated total sales of approximately $1.4 billion in 2012. As of year-end 2012, anchor sales were estimated to be over $452 million, with each anchor achieving annual aggregate sales greater than their respective national chain averages. For the trailing 12 month (TTM) period ended August 2013, comparable in-line sales psf were $1,750, the highest in-line sales figure for any regional mall rated by Fitch.
Low Occupancy Costs: For the TTM ended August 2013, occupancy costs were 9.3%. For comparable trophy caliber malls with sales exceeding $1,000 psf, occupancy costs are typically between 15%?20%.
Mall Draws from a Diverse Customer Base: Approximately 40% of the customer base resides outside the trade area, and 33% of shoppers are regional day trippers or tourists. The mall is the second most visited mall behind the Mall of America, with over 28 million visitors a year. The mall generates high demand from a wealthy customer base from South America, Canada and Europe.
Experienced Ownership and Management: The loan is sponsored jointly by Turnberry Retail Holding, L.P. (66.7%) and Simon Property Group, L.P. (33.3%). The property has been operated and managed by Turnberry Development, LLC since being built in 1983.
Fitch performed several stress scenarios in which the Fitch NCF was stressed. Fitch determined that a 52.7% reduction in Fitch's NCF would cause the notes to break even at a 1.0x DSCR, based on the actual debt service.
Fitch evaluated the sensitivity of the ratings for class A and a 5.2% decline in Fitch NCF would result in a one category downgrade, while a 29.6% decline would result in a downgrade to below investment grade. The Rating Sensitivity section in the presale report includes a detailed explanation of additional stresses and sensitivities.
Key Rating Drivers and Rating Sensitivities are further described in the accompanying presale report. The presale report is available to all investors on Fitch's web site 'www.fitchratings.com'.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (May 2013);
--'Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions' (September 2013);
--'U.S. Commercial Mortgage Servicer Rating Criteria' (February 2011);
--'Counterparty Criteria for Structured Finance and Covered Bonds' (May 2013).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions
U.S. Commercial Mortgage Servicer Rating Criteria
Counterparty Criteria for Structured Finance and Covered Bonds