Fitch Upgrades 2 Classes of FUNB 1999-C4

CHICAGO--()--Fitch Ratings has upgraded two and affirmed three classes of First Union National Bank Commercial Mortgage Trust (FUNB) commercial mortgage pass-through certificates series 1999-C4. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The upgrades are a result of paydown, defeasance, and increased credit enhancement which is sufficient to offset future expected losses. Fitch modeled losses of 21.7% of the remaining pool; expected losses on the original pool balance total 3.1%, including $22.1 million (2.5% of the original pool balance) in realized losses to date. Fitch has designated one loan (43.2%) as a Fitch Loan of Concern, which is the largest loan in the pool and currently in special servicing.

As of the April 2014 distribution date, the pool's aggregate principal balance has been reduced by 97.1% to $25.6 million from $885.7 million at issuance. The pool has become extremely concentrated with only nine of the original 156 loans remaining. Per the servicer reporting, seven loans (55.9% of the pool) are defeased. Interest shortfalls are currently affecting classes M through N.

The specially serviced loan, also the largest loan in the pool (43.2% of the pool), is secured by a 215,860 square foot retail center in Ashwaubenon, WI. The loan had previously transferred to special servicing in 2009 due to maturity default. The loan returned back to the master servicer in March 2011 after receiving a modification of the loan that included a maturity date extension, interest-only period to August 2012, as well as an interest rate reduction. The loan most recently transferred back to special servicing in July 2012 for payment default, and subsequently matured without repayment in August 2012. The Borrower has been unresponsive and has not provided updated financials on the property. A receivership hearing was delayed by the bankruptcy filing of one of the borrowing entities in April 2014. Given the bankruptcy filing, the special servicer has modified the workout strategy to a note sale.

RATING SENSITIVITY

Rating Outlooks on classes H through K remain Stable due to increasing credit enhancement, continued paydown from principal amortization, and proceeds from defeased loans.

Fitch upgrades the following classes as indicated:

--$2.4 million class H to 'AAAsf' from 'Asf', Outlook Stable;

--$2.2 million class J to 'AAAsf' from 'Asf', Outlook Stable.

Fitch affirms the following classes but assigns or revises REs as indicated:

--$8.9 million class L at 'CCCsf', RE 60%;

--$5.5 million class M at 'Dsf', RE 0%.

Fitch affirms the following class as indicated:

--$6.6 million class K at 'Asf', Outlook Stable.

The class A-1, A-2, B, C, D, E, F and G certificates have paid in full. Fitch does not rate the class N certificate, which has been reduced to zero due to realized losses. Fitch previously withdrew the rating on the interest-only class IO 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=829290

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Primary Analyst
Valerie Jayson
Associate Director
+1-312-368-3116
Fitch Ratings, Inc.
70 W Madison St
Chicago, IL 60602
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations:
Sandro Scenga, +1-212-908-0278 (New York)
sandro.scenga@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Valerie Jayson
Associate Director
+1-312-368-3116
Fitch Ratings, Inc.
70 W Madison St
Chicago, IL 60602
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations:
Sandro Scenga, +1-212-908-0278 (New York)
sandro.scenga@fitchratings.com