NEW YORK--(BUSINESS WIRE)--Fitch Ratings has downgraded two distressed classes and affirmed 16 classes of Banc of America Commercial Mortgage Inc., commercial mortgage pass-through certificates, series 2005-1. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The downgrades reflect more certainty of losses for the specially serviced loans; therefore, the already distressed bonds are being downgraded. The affirmations are due to the relatively stable performance of the pool and loss expectations consistent with the prior rating action. Fitch modeled losses of 8.6% of the remaining pool; expected losses on the original pool balance total 9.4%, including $138.9 million (5.9% of the original pool balance) in realized losses to date. Fitch has designated 30 loans (38.4%) as Fitch Loans of Concern, which includes two specially serviced assets (11.8%).
As of the December 2013 distribution date, the pool's aggregate principal balance has been reduced by 58.7% to $958.5 million from $2.36 billion at issuance. Per the servicer reporting, nine loans (11.8% of the pool) are defeased. Interest shortfalls are currently affecting classes E, F, and H through P.
The largest contributor to expected losses is the specially-serviced The Mall at Stonecrest loan (10.1% of the pool), which is secured by the 396,840 square foot (sf) portion of a regional mall totaling 1.2 million sf located in Lithonia, GA, approximately 20 miles east of downtown Atlanta. The loan transferred to the special servicer in January 2013 for imminent payment default. Despite the transfer to the special servicer the loan has remained current. The collateral consists of a 16-screen AMC Theater, approximately 140 in-line tenants, a food court, kiosk space and strip space. As of March 2013, the mall had a collateral occupancy of approximately 85% and a total occupancy of 93%. The January 2013 trailing 12-month net operating income debt service coverage ratio (NOI DSCR) was 1.01x.
The next largest contributor to expected losses is a specially-serviced loan (1.7%) which is secured by a 637,531 sf industrial warehouse located in Fishers, IN, approximately 30 minutes NE of Indianapolis. As of December 2013, the property is 100% vacant with foreclosure anticipated to occur in 2014.
The third largest contributor to expected losses is the Indian River Mall & Commons loan (7.4%), which is secured by 302,456 sf of the 748,008 sf enclosed regional mall and 132,121 sf of the adjacent 260,868 sf power center located in Vero Beach, Florida. The year-to-date net operating income debt service coverage ratio (NOI DSCR) as of third quarter 2013 was 1.09x. The DSCR decreased when compared with prior year analysis which reported a DSCR of 1.22x. The property was 80.1% occupied as of third quarter 2013.
Rating Outlooks on classes A-1A through A-J remain Stable due to the payment priority in the capital structure with continued paydown and stable performance. The Rating Outlook on class B is Negative as the class may be subject to a downgrade if there is further deterioration to the pool's cash flow performance and/or decrease in value of the specially serviced loans. Additional downgrades to the distressed classes (those rated below 'B') are expected as losses are realized.
Fitch downgrades the following classes and assigns or revises Recovery Estimates (REs) as indicated:
--$43.5 million class D to 'CCsf' from 'CCCsf', RE 5%;
--$20.3 million class E to 'Csf' from 'CCsf', RE 0%.
Fitch affirms the following classes and assigns Recovery Estimates (RE) as indicated:
--$98.2 million class A-1A at 'AAAsf', Outlook Stable;
--$141.4 million class A-4 at 'AAAsf', Outlook Stable;
--$381.2 million class A-5 at 'AAAsf', Outlook Stable;
--$14.2 million class A-SB at 'AAAsf', Outlook Stable;
--$168.4 million class A-J at 'Asf', Outlook Stable;
--$61 million class B at 'BBsf', Outlook Negative;
--$20.3 million class C at 'CCCsf', RE 100%.
--$9.9 million 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%;
--$0 class L at 'Dsf', RE 0%;
--$0 class M at 'Dsf', RE 0%;
--$0 class N at 'Dsf', RE 0%;
--$0 class O at 'Dsf', RE 0%.
The class A-1, A-2, A-3, SM-A, SM-B, SM-C, SM-D, SM-E, SM-F, SM-G, SM-H, FM-A, FM-B, FM-C, and FM-D certificates have paid in full. Fitch previously withdrew the rating on the interest-only class XW certificates. Fitch does not rate class P, which has been reduced to zero due to realized losses. Additionally, Fitch did not rate the SM-J and LM rake classes.
Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 11, 2013 report, 'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria', which is available at 'www.fitchratings.com' under the following headers:
Structured Finance >> CMBS >> Criteria Reports
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (May 24, 2013);
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 11, 2013).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria