NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed 19 classes of Banc of America Commercial Mortgage Inc. (BACM) commercial mortgage pass-through certificates series 2005-4. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The affirmations reflect sufficient credit enhancement and continued stable performance of the pool since Fitch's last rating action. Fitch modeled losses of 10.3% of the remaining pool; expected losses on the original pool balance total 10.1%, including $53 million (3.3% of the original pool balance) in realized losses to date. Fitch has designated 39 loans (33.8%) as Fitch Loans of Concern, which includes 16 specially serviced assets (10%). Of the remaining pool, 79% matures in 2015, most of which (52%) matures between May and July 2015.
The largest contributor to expected losses is the Capistrano I Office Buildings loan (2.6% of the pool), which is secured by an 188,040 square foot (sf) office building located in San Juan Capistrano, CA. The largest three tenants are Los Golondrinas Mex. Food/Arturo Galindo Jr. (4%) lease expiration January 2019; Semi Conductor Technology Associates Inc. (3%) expiration December 2017; and The Effect (3%) expiration December 2014. No other tenant represents more than 2% of the total net rentable area (NRA) at the property. Per the borrower, property performance has been affected by on-going freeway and bridge construction in the area in addition to lower occupancy and declining base rents. The borrower continues to actively market the vacancies; however, per the borrower, there are no firm prospects. The year-end (YE) 2013 net operating income (NOI) declined 8% from YE 2012 and 44% since issuance. There is approximately 21% lease rollover in 2014 and 23% in 2015. Although property occupancy has improved slightly to 70% compared to 66% at Fitch's last review, average rent declined to $14 sf from $16 sf at last review; occupancy and rents remain below market. Per REIS as of 1Q 2014, the Southern Orange County submarket vacancy is 17.8% with asking rent $28.65sf. The loan remains current.
The next largest contributor to expected losses is the specially-serviced Prairie Stone Commons loan (1.2%), which is secured by a 101,615 sf office property located in Hoffman Estates, IL, built in 1992. The loan transferred to special servicing in 2009 due to a payment default. As of May 2014, the property is 38% occupied. A summary judgment was received at the June 2014 hearing and a sale date has been set for July 31st. The special servicer was scheduled to attend a mandatory court ordered settlement conference in the Guaranty lawsuit.
The third largest contributor to expected losses is the specially-serviced Friar's Branch Crossing (0.9%), which is a 110,027 SF office/retail property located in Chattanooga, TN. The asset was acquired via foreclosure in September 2011 and is currently real estate owned (REO). As of June 2014, the property is 58% occupied. The leasing broker is NAI Charter Real Estate Corporation. Per the special servicer, the asset is currently being marketed by a loan sale advisor with several other loan and REO assets.
Rating Outlooks on classes A-5A through A-1A and B remain Stable due to sufficient credit enhancement and continued paydown of the classes. The revision of class A-J to Positive from Stable reflects the expected increases in credit enhancement due to additional defeasance, expected paydown and upcoming loan maturities in 2015. With continued stable pool performance and loss expectations, and upgrade to class A-J is likely.
Fitch affirms the following classes and assigns or revises Rating Outlooks and REs as indicated:
--$97.1 million class A-J at 'BBBsf', Outlook to Positive from Stable;
--$15.9 million class C at 'Bsf', Outlook to Stable from Negative;
--$29.7 million class D at 'CCCsf', RE 60%.
Fitch affirms the following classes:
--$485.9 million class A-5A at 'AAAsf', Outlook Stable;
--$125.7 million class A3 and A4 at 'AAAsf', Outlook Stable;
--$7.3 million class A-SB at 'AAAsf', Outlook Stable;
--$69.4 million class A-5B at 'AAAsf', Outlook Stable;
--$80.5 million class A-1A at 'AAAsf', Outlook Stable;
--$31.7 million class B at 'BBsf', Outlook Stable;
--$17.8 million class E at 'CCsf', RE 0%;
--$19.8 million class F at 'CCsf', RE 0%;
--$17.8 million class G at 'Csf', RE 0%;
--$23.8 million class H at 'Csf', RE 0%;
--$7.9 million class J at 'Csf', RE 0%;
--$2.6 million class K at 'Dsf', RE 0%;
--$0 class L at 'Dsf', RE 0%;
--$0 class M at 'Dsf', RE 0%;
--$0 class N at 'Dsf', RE 0%;
--$0 class O at 'Dsf', RE 0%.
Classes A-1 and A-2 are paid in full. Fitch does not rate the class P certificates. Fitch previously withdrew the ratings on the interest-only class XP and XC 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 20, 2014);
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 11, 2013).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria