Fitch Upgrades Capital Lease Funding, Series 1997 CTL-1

NEW YORK--()--Fitch Ratings upgrades one class and affirms the remaining three distressed classes of Capital Lease Funding Securitization, L.P., Series 1997-CTL-1 corporate credit backed pass-through securities. A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The upgrade reflects stable overall pool performance and continued amortization. All remaining loans are current and there are no loans on the watchlist.

Of the original 30 loans, six loans remain, each of which is a credit tenant lease on a single-tenant property.

Currently, 100% of the underlying credit tenants are considered below investment grade by Fitch, compared with 79.5% at the previous review and 30.4% at issuance.

As of the March 2014 distribution, the pool balance has been reduced by 94.8% to $6.7 million from $129.4 million at issuance.

RATINGS SENSITIVITY

The Rating Outlook on class G is Stable as future affirmations are expected. While credit enhancement is high, upgrades are not anticipated due to the significant concentration of the remaining pool and the risks associated with single-tenant properties. In addition, due to the nature of credit tenant leases, the master servicer does not provide updated financial reporting, leasing information or other performance details for the loans in the pool.

The pool's listed tenants are: RadioShack Corp. (55.4% of the pool; rated 'CCC' as of January 2014), Rite Aid Corp. (25.4%; rated 'B-' with a Stable Outlook as of November 2013), Walgreen Co. (7.2%; rated investment grade), Delhaize America Inc. (7.1%; rated investment grade), and CVS Caremark Corporation (4.9%; rated 'BBB+' with a Stable Outlook as of January 2014).

The largest loan in the pool (55.4% of the pool) is collateralized by a 184,000 square foot (sf) industrial building located directly south of Salt Lake City, UT. The property was originally leased to Radioshack; however, the last inspection report indicated that the building is now occupied by Costco. The servicer was unable to provide information on the new tenant, including lease or sublease terms and rate. The building appeared to be well maintained and fully utilized by the sub-tenant for its new intended use.

Fitch upgrades the following class and revises the Outlook as indicated:

--$2.9 million class D to 'Bsf' from 'B-sf'; Outlook to Stable from Negative;

Fitch affirms the following class and Recovery Estimate:

--$3.8 million class E at 'Dsf'; RE 50%.

Classes A-1, A-2, A-3, B, and C have repaid in full. Classes F and G, which remain at 'D'; RE 0%, have been reduced to zero due to realized losses. Fitch previously withdrew its rating on the interest-only class IO.

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=824611

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Contacts

Fitch Ratings
Primary Analyst
Jay Bullie, +1 312-368-2079
Associate Director
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Committee Chairperson
Mary MacNeill, +1 212-908-0785
Managing Director
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

Sharing

Contacts

Fitch Ratings
Primary Analyst
Jay Bullie, +1 312-368-2079
Associate Director
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Committee Chairperson
Mary MacNeill, +1 212-908-0785
Managing Director
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com