NEW YORK--(BUSINESS WIRE)--Fitch Ratings has upgraded one class of GMAC Commercial Mortgage Securities, Inc.'s mortgage pass-through certificates, series 1998-C2 (GMAC 1998-C2) and affirmed the remaining class ratings. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The upgrade was due to the improved performance of the underlying collateral, large percentage of defeased loans (22.6%), and anticipated paydown from maturing loans in the next 12 months. Fitch modeled losses of 7.7% of the remaining pool; expected losses of the original pool are at 4.3% including losses already incurred to date. Fitch has designated five loans (12.9%) as Fitch Loans of Concern of which two (9.3%) are specially serviced.
RATINGS SENSITIVITY
The upgrade reflects a decrease in the pool's leverage from amortization and loans that paid off at maturity. Further upgrades will be limited by adverse selection of the remaining collateral and asset concentration, especially exposure to single-tenant and self-storage properties. The ratings are expected to remain stable for the remaining life of the deal.
As of the April 2014 distribution date, the pool's aggregate principal balance has been paid down by 97% to $75.3 million from $2.53 billion at issuance.
The largest contributor to modeled losses, Georgetown Plaza Shopping Center (6.65% of the pool), is secured by a 109,800 square foot (sf) retail center in Indianapolis, IN. The borrower was unable to refinance partly due to environmental issues relating to a former tenant at the site. The special servicer has worked with the borrower and insurance company to complete remediation activities at the site. A plan has been approved and the clean-up has been ongoing. The special servicer is awaiting court ruling on a number of legal issues before determining next steps in resolving the loan's default.
The second largest contributor to modeled losses, Bayhead Mobile Home Park, is a 238-pad manufactured housing community (2% of the pool) located in Tallahassee, FL. The community is located in a declining market that is in a state of transition. There have been multiple closings of mobile home communities that are in the market along with increased construction of multifamily properties. The property's occupancy rate decreased to 33% in the fourth quarter of 2013 after 166 units were vacated on the property. The sponsor changed the property manager and started an aggressive marketing plan to re-stabilize the property. Major rent concessions could offset an immediate increase in occupancy in the near term and lead to continued performance volatility during 2014.
The second specially serviced loan, Stratford House, is 149,410 sf healthcare facility located in Chattanooga, TN. The loan transferred to the special servicer in Nov. 2013 for payment default. The 197-bed center has historically performed well with occupancy consistently around 95% and the debt service coverage ratio at 3.0x. The sponsor indicates that negotiations with the operator are on-going to renew the lease and the loan will be brought current once a new agreement is executed.
Fitch upgrades the following class:
--$19 million class H to 'AAsf' from 'Asf'; Outlook Stable.
Fitch affirms the following classes as indicated:
--$18.6 million class G at 'AAAsf'; Outlook Stable;
--$19 million class J at 'BBsf'; Outlook Stable;
--$18.8 million class K at 'Dsf'; RE 75;
--$0 million class L at 'Dsf'; RE 0;
--$0 million class M at 'Dsf'; RE 0.
Fitch does not rate class N. Classes A-1, A-2, B, C, D, E, and F have paid in full. Class X was previously withdrawn.
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
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724961
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=827695
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