NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed five and downgraded two classes of GMAC Commercial Mortgage Securities, Inc., commercial mortgage pass-through certificates, series 2002-C3 (GMAC 2002-C3). A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The downgrades reflect an increase in Fitch-modeled losses on the remaining pool as well as greater than expected realized losses on the specially serviced loans disposed of since the last rating action. The affirmations are due to sufficient credit enhancement to the remaining classes. Fitch modeled losses of 36.5% of the remaining pool; expected losses on the original pool balance total 4.9%, including $25.1 million of realized losses to date. Fitch had modeled losses of 3.7% of the original pool balance at the last rating action.
As of the April 2014 distribution date, the pool's aggregate principal balance has been reduced by 95.3% to $36.4 million from $777.4 million at issuance. The pool is extremely concentrated with eight loans remaining, of which the four largest loans (86.7% of pool) were in special servicing as of the April 2014 remittance report. One loan (4.8%) was defeased. Cumulative interest shortfalls totaling $1.58 million are currently affecting classes J through P.
The Negative Outlooks on classes L and M reflect the adverse selection of the remaining pool as well as concerns with the ultimate workout of the top four loans in the pool, which are all currently in special servicing. 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.
The largest contributor to modeled losses is the pool's largest loan, Broadmoor Apartments (28.3% of pool), which is secured by a 284-unit multifamily property located in Tampa, FL. The loan was transferred to special servicing in July 2012 due to maturity default. As of the March 2014 rent roll, the property was 78.7% occupied. In April 2013, the borrower filed Chapter 11 bankruptcy. A court-ordered modification was subsequently granted in November 2013, whereby terms included an increase in principal, a reduction in interest rate, a four-year loan extension, and a modified payment schedule with interest-only payments for the first 18 months and principal and interest payments for the remainder of the loan term. The bankruptcy has since been dismissed and the special servicer continues to monitor the loan for timely payments.
The next largest contributor to modeled losses is the second largest loan, Nashville Business Center (25%), which is secured by an 893,100 square foot (sf) industrial complex located in Murfreesboro, TN. The loan was transferred to special servicing in November 2011 for monetary default after a major tenant, Vi-Jon (a private health care and beauty manufacturer) which initially occupied 50% of the space, vacated at its May 2010 lease expiration. In September 2013, a modification was granted whereby the loan was bifurcated into an A-note and B-note, the loan was converted to interest-only for the remaining term, and the maturity date was extended to July 2014 with two additional one-year extension options if certain criteria are met. As of the December 2013 rent roll, the property was 41.8% occupied by one sole tenant: Store Opening Solutions, Inc. Per the rent roll, approximately 22.4% was leased by the tenant until December 2015, while 19.4% was being leased on a month-to-month basis. The tenant also has the option to lease another 8.2% on an 'as-needed' basis. The borrower is aggressively attempting to lease the remaining vacant space. According to the special servicer, the loan was returned to the master servicer on March 28, 2014.
The third largest contributor to modeled losses is the third largest loan, Lake Park Pointe Shopping Center (20.3%), which is secured by a 79,945 sf retail property located in Chicago, IL. The loan was transferred to special servicing in April 2012 for monetary default. The prior largest tenant, Michael's Fresh Markets (53% of property square footage), filed Chapter 11 bankruptcy and vacated. A portion of this space was re-tenanted by Ross Dress for Less (32%) in November 2013. The borrower requested a loan modification and is under negotiation with the special servicer. Multiple forbearance agreements were executed, including prior ones that had expired in December 2012, March 2013, December 2013, and March 2014. The borrower has requested an additional 90 - 120 days to allow time to complete financing.
Fitch has downgraded the following classes as indicated:
--$5.8 million class L to 'CCsf' from 'CCCsf'; RE 0%;
--$4.9 million class M to 'Csf' from 'CCsf'; RE 0%.
Fitch has affirmed the following classes as indicated:
--$16.8 million class J at 'BBsf'; Outlook Negative;
--$8.7 million class K at 'Bsf'; Outlook Negative;
--$0.2 million class N at Dsf; RE 0%;
--$0 class O-1 at Dsf; RE 0%;
--$0 class O-2 at Dsf; RE 0%.
The class A-1, A-2, B, C, D, E, F, G, and H certificates have paid in full. Fitch does not rate the class P certificates. Fitch previously withdrew the ratings on the interest-only class X-1 and X-2 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:
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
Global Structured Finance Rating Criteria