Fitch Upgrades 1 Class of Bank of America, N.A. - FUNB 2001-3

CHICAGO--()--Fitch Ratings has upgraded one and affirmed five classes of Bank of America, N.A. - First Union National Bank Commercial Mortgage Trust's (BofA-FUNB) commercial mortgage pass-through certificates series 2001-3. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

Fitch modeled losses of 35% of the remaining pool; expected losses on the original pool balance total 5%, including $44.7 million (3.9% of the original pool balance) in realized losses to date. Eight loans remain in the transaction. Fitch has designated four loans (54.3%) as Fitch Loans of Concern, which includes two specially serviced assets (17.6%).

As of the February 2014 distribution date, the pool's aggregate principal balance has been reduced by 96.8% to $36.1 million from $1.14 billion at issuance. No loans are defeased. Interest shortfalls are currently affecting classes L through Q.

The contributors to expected losses are related to two warehouse properties located in Hampton, VA (46% of the pool). The two buildings total 516,000 square feet (sf) and are leased to the same tenant, who is vacating both properties upon the lease expiration in July 2014. Fitch applied a dark value analysis to estimate an expected recovery given the upcoming vacancy, making assumptions for market rent declines, downtime between leases, carrying costs, and re-tenanting costs.

The largest loan in the pool is the Sahara Town Center loan, which is secured by a 98,344 sf retail center located in Las Vegas, Nevada. The loan transferred to the Special Servicer in August 2011 due to balloon payment default. The maturity date was extended to September 2022 and was returned to the Master Servicer in August 2013. Occupancy has remained stable at 83% as reported for year-end (YE) 2012 and the most recent September 2013 rent roll.

RATING SENSITIVITY

The Rating Outlook on class K is Stable as rating changes are not expected. Although the class has high credit enhancement and is receiving principal paydown, Fitch has concerns with potentially increasing interest shortfalls, as they are currently affecting classes L and below. The Rating Outlook on class L remains Negative due to the pool concentration and the vacancy concerns of the warehouse properties in Hampton, VA.

Fitch upgrades the following classes as indicated:

--$9.7 million class K to 'Asf' from 'A-sf', Outlook Stable.

Fitch affirms the following classes and revises REs as indicated:

--$8.5 million class M at 'CCCsf', RE 60%;
--$9.3 million class N at 'Dsf', RE 0%.

Fitch affirms the following classes as indicated:

--$8.5 million class L at 'BBBsf', Outlook Negative;
--$0 class O at 'Dsf', RE 0%;
--$0 class P at 'Dsf', RE 0%.

Classes A-1, A-2, A-2F, B through J and XP have paid in full. Fitch does not rate the class Q certificates or the subordinate component class V-1, V-2, V-3, V-4 and V-5 certificates. Fitch previously withdrew the rating on the interest-only class XC certificates.

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
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724961

Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=822674
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Contacts

Fitch Ratings
Primary Analyst
R. Brook Sutherland, +1-312-606-2346
Director
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Committee Chairperson
Britt Johnson, +1-312-606-2341
Senior Director
or
Media Relations
Sandro Scenga, +1-212-908-0278 (New York)
sandro.scenga@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
R. Brook Sutherland, +1-312-606-2346
Director
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Committee Chairperson
Britt Johnson, +1-312-606-2341
Senior Director
or
Media Relations
Sandro Scenga, +1-212-908-0278 (New York)
sandro.scenga@fitchratings.com