NEW YORK--(BUSINESS WIRE)--Fitch Ratings has upgraded five and affirmed 13 classes of Wachovia Bank Commercial Mortgage Trust, commercial mortgage pass-through certificates, series 2005-C19 (WBCMT 2005-C19). A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The upgrades and affirmations reflect an increase in credit enhancement and continued stable collateral performance since Fitch's last rating action. Fitch modeled losses of 5.5% of the remaining pool; expected losses on the original pool balance total 2.9%, including $3.78 million of realized losses to date. Fitch has designated 13 loans (23.9%) as Fitch Loans of Concern, which includes one specially serviced asset (3.2%).
As of the February 2014 distribution date, the pool's aggregate principal balance has been reduced by 51.4% to $784.5 million from $1.61 billion at issuance. According to the servicing report, three loans (23.7% of pool) are defeased, including the largest loan (22.7%), which defeased since the last rating action. Cumulative interest shortfalls totaling $4 million are currently impacting classes M through P.
The largest contributor to modeled losses, which remains the same as the last rating action, is the specially-serviced O'Fallon Walk loan (3.2% of pool). The loan is secured by a 157,589 square foot retail property located in O'Fallon, MO. The loan transferred to special servicing in December 2009 for payment default along with two other cross-collateralized and cross-defaulted loans which have since been liquidated.
Property performance has declined significantly since issuance. As of January 2014, the property was 66.4% occupied compared to 96.1% at issuance. The decline in occupancy has resulted in a significant drop in property cash flow. The servicer-reported net-operating income (NOI) for 2013 was approximately 80% below underwritten NOI at issuance. The property is anchored by Gordman's (38.7% of NRA) on a lease which expires in 2018. According to the review of the December 2013 rent roll, approximately 16.4% of the total property square footage rolls in 2014 and 6.5% rolls in 2015, a majority of which is associated with the leases of the second, third, and fourth largest tenants. According to REIS and as of the fourth quarter 2013 (4Q'13), the St. Charles County retail submarket of St. Louis reported a vacancy of 18.5% for non-anchor retail. The special servicer is working on getting borrower cooperation to deed-in-lieu and expects to market the asset for sale over the summer.
The next largest contributor to modeled losses is the Dunwoody Place Shopping Center loan (1.6%), which is secured by a 103,053 sf supermarket-anchored retail property located in Atlanta, GA. As of January 2014, the property was 84% occupied. The property is anchored by a Publix supermarket (55.1% of NRA), which has a lease that is co-terminous with the loan's May 2015 maturity.
Property performance continues to decline. The NOI reported for 2012 dropped 16% from 2011 primarily due to lower base rents and remains 40% below NOI at issuance. For the first nine months of 2013, the debt service coverage ratio, on a NOI basis, was 0.64x, declining from 0.76x, 0.91x, 0.94x, and 1.27x at year-end (YE) 2012, YE 2011, YE 2010, and 1.27x at issuance, respectively. According to REIS and as of the 4Q'13, the Sandy Springs/North Fulton submarket of Atlanta reported a vacancy of 10.6% for anchor retail and 17.5% for non-anchor retail.
RATING SENSITIVITIES
Ratings are expected to remain stable due to improved credit enhancement, stable collateral performance and continued paydown. The Rating Outlooks on classes C and D were revised to Positive from Stable as future upgrades may be warranted as the transaction continues to deleverage and if collateral performance continues to remain stable or improve. Distressed classes (those rated below 'B') may be subject to downgrades as losses are realized or if realized losses are greater than Fitch's expectations. Conversely, if performance continues to improve or as loans payoff at their near-term maturity (with 98% maturing prior to 2016), upgrades may be warranted on the already distressed classes with the highest credit enhancement.
Fitch has upgraded the following classes and revised Rating Outlooks as indicated:
--$40.4 million class B to 'AAAsf' from 'AAsf'; Outlook Stable;
--$20.2 million class C to 'AAsf' from 'AA-sf'; Outlook to Positive from Stable;
--$16.1 million class E to 'Asf' from 'A-sf'; Outlook Stable;
--$20.2 million class F to 'BBBsf' from 'BBB-sf'; Outlook Stable;
--$20.2 million class H to 'Bsf' from 'B-sf'; Outlook to Stable from Negative.
In addition, Fitch has affirmed the following classes and revised Rating Outlooks as indicated:
--$227.7 million class A-6 at 'AAAsf'; Outlook Stable;
--$76.4 million class A-1A at 'AAAsf'; Outlook Stable;
--$80.7 million class A-FL at 'AAAsf'; Outlook Stable;
--$80.7 million class A-M at 'AAAsf'; Outlook Stable;
--$100.9 million class A-J at 'AAAsf'; Outlook Stable;
--$32.3 million class D at 'Asf'; Outlook to Positive from Stable;
--$16.1 million class G at 'BBsf'; Outlook Stable;
--$8.1 million class J at 'CCCsf'; RE 100%;
--$8.1 million class K at 'CCCsf'; RE 0%;
--$6.1 million class L at 'CCCsf'; RE 0%;
--$4 million class M at 'CCCsf'; RE 0%;
--$2 million class N at 'CCCsf'; RE 0%;
--$4 million class O at 'Csf'; RE 0%.
The class A-1, A-2, A-3, A-4, A-5, and A-PB certificates have paid in full. Fitch does not rate the class P certificates. Fitch previously withdrew the ratings on the interest-only class X-P and X-C 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=823735
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