Fitch Affirms COMM Mortgage Trust 2005-FL10

CHICAGO--()--Fitch Ratings has affirmed four classes of COMM Mortgage Trust 2005-FL10. A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS

As of the August 2014 remittance, the pool has paid down by 98% since issuance, with only one asset remaining.

The affirmations of the distressed ratings are due to exceptionally high credit risk associated with the remaining asset, Berkshire Mall. The mall comprises 589,146 square feet (sf) of a 715,146-sf regional mall located in Lanesboro, MA, about 40 miles east of Albany, NY. The collateral consists of 192,793 sf of in-line space and 396,353 sf of anchor/major tenant space. The non-collateral anchor space (Target) totals approximately 126,000 sf.

The mall continues to face significant challenges related to trade area fundamentals, tenant retention and capital expenditure needs which will ultimately affect investor interest and the long-term viability of the asset. The immediate trade area for the subject property is considered rural and tertiary in nature and is confronting declining population trends with incomes below state and national levels. Additionally, weak retail sales are affecting progress on long-term tenant renewals, causing uncertainty for prospective investors. Management has extended the terms of several anchor tenants on a short-term basis; however, tenants have been reluctant to provide commitment to the location. In particular, major anchor tenants, representing 31.1% of the mall, have lease expirations by the end of 2016. The asset will eventually require additional capital expenditures and cosmetic renovation to remain competitive in the market.

As of June 2014, the mall was 73% occupied, a decline from 78% in the year prior. The loan transferred to special servicing in January 2014 due to the imminent expiration of the forbearance agreement. A deed-in-lieu of foreclosure was executed in June of 2014 and the asset remains real estate owned. The mall is being managed and leased by CBL & Associates Properties, which specializes in new development and repositioning of distressed properties. As of June 2014, approximately $3.6 million remains in reserves.

RATING SENSITIVITIES

The ratings of the remaining distressed classes (those rated below 'Bsf') are subject to further downgrade with the loss of any major tenant coupled with a prolonged hold period prior to disposition. Fitch anticipates significant losses based on current valuations of the asset and uncertainty related to anchor tenant renewal and future stabilization of the asset.

Fitch has affirmed the following classes as indicated:

--$6.4 million class J at 'CCCsf'; RE 100%;

--$19.8 million class K at 'Csf'; RE 10%;

--$6.5 million class L at 'Csf'; RE 0%;

--$4.3 million class M at 'Dsf'; RE 0%.

The following classes, originally rated by Fitch, have paid in full: A-1, A-J1, A-J2, X-1, MOAX-1, MOAX-2, MOAX-3, B, C, D, E, F, MOA-1, MOA-2, N-PC, O-PC, P-PC, Q-PC, N-DEL and O-DEL.

Fitch does not rate the class A-J3, G, H and MOA-3 certificates.

In addition, Fitch previously withdrew the ratings on the interest-only classes X-2-DB, X-2-NOM, X-2-SG, X-3-DB, X-3-NOM and X-3-SG.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (Aug. 4, 2014);

--'Surveillance Criteria for U.S. CREL CDOs and CMBS Large Loan Floating-Rate Transactions' (Nov. 25, 2013).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389

Surveillance Criteria for U.S. CREL CDOs and CMBS Large Loan Floating-Rate Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=723059

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=860294

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Contacts

Fitch Ratings
Primary Analyst:
David Ro, +1-312-368-3132
Director
Fitch Ratings, Inc.
70 West Madison
Chicago, IL 60602
or
Committee Chairperson:
Chris Bushart, +1-212-908-0606
Senior Director
or
Alyssa Castelli, +1-212-908-0540
Media Relations, New York
alyssa.castelli@fitchratings.com

Sharing

Contacts

Fitch Ratings
Primary Analyst:
David Ro, +1-312-368-3132
Director
Fitch Ratings, Inc.
70 West Madison
Chicago, IL 60602
or
Committee Chairperson:
Chris Bushart, +1-212-908-0606
Senior Director
or
Alyssa Castelli, +1-212-908-0540
Media Relations, New York
alyssa.castelli@fitchratings.com