NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed 20 classes of Wachovia Bank Commercial Mortgage Trust 2006-C25 (WBCMT 2006-C25) commercial mortgage pass-through certificates. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
Fitch modeled losses of 7.3% of the remaining pool; expected losses on the original pool balance total 10.5%, including $148.3 million (5.2% of the original pool balance) in realized losses to date. Fitch has designated 29 loans (19.7%) as Fitch Loans of Concern, which includes seven specially serviced assets (6.8%).
As of the November 2014 distribution date, the pool's aggregate principal balance has been reduced by 26.4% to $2.11 billion from $2.86 billion at issuance. Per the servicer reporting, four loans (10.4% of the pool) are defeased. Interest shortfalls are currently affecting classes H through S.
The largest contributor to expected losses is the specially-serviced Hercules Plaza loan (3% of the pool), which is secured by a 517,000 sf office property located in Wilmington, DE. The most recently reported occupancy was 73%. The property was previously 100% master leased to a single tenant; however, they vacated at lease expiration in May 2013. Several sub-tenants then went direct. A modification of the loan was recently completed, which, among other terms, extended the loan term an additional two years.
The next largest contributor to expected losses is the Piedmont Center Buildings 9-12 loan (3.1%), which is secured by four multi-tenanted office properties located in the Buckhead sub-market of Atlanta, GA. The servicer reported YTD September 2014 DSCR was 1.12x. As of September 2014, occupancy was reported at 74% with approximately 6% lease rollover expected through 2015. Recent sub-market metrics indicate the market remains relatively weak.
The third largest contributor to expected losses is the real estate owned (REO) Skagit Valley Square property (0.8%), which consists of a 172,000 sf retail property located in Mount Vernon, WA. The loan transferred to special servicing in 2010 after its anchor tenant filed for bankruptcy. Foreclosure was completed in late 2011. As of the November 2014 rent roll, the property was 69% occupied. The special servicer continues efforts to stabilize the property prior to any sale.
RATING SENSITIVITIES
Rating Outlooks on classes A-4 through B are Stable due to increasing credit enhancement and continued paydown. The Rating Outlook on C remains negative due to the potential for further negative credit migration of the underlying collateral including continued transfers to special servicing or performance declines of current loans.
Distressed classes (those rated below 'B') may be subject to further downgrades as additional losses are realized.
Fitch affirms the following classes but assigns or revises Rating Outlooks and REs as indicated:
--$10.7 million class B at 'BBsf'; Outlook to Stable from Negative;
--$32.2 million class D at 'CCCsf'; RE 100%.
Fitch affirms the following classes as indicated:
--$608.4 million class A-4 at 'AAAsf'; Outlook Stable;
--$500 million class A-5 at 'AAAsf'; Outlook Stable;
--$287.8 million class A-1A at 'AAAsf'; Outlook Stable;
--$286.2 million class A-M at 'AAAsf'; Outlook Stable;
--$218.3 million class A-J at 'BBsf'; Outlook Stable;
--$35.8 million class C at 'Bsf'; Outlook Negative;
--$17.9 million class E at 'CCCsf'; RE 0%;
--$32.2 million class F at 'CCsf'; RE 0%;
--$32.2 million class G at 'Csf'; RE 0%;
--$32.2 million class H at 'Csf'; RE 0%;
--$12.7 million class J at 'Dsf'; RE 0%;
--$0 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%;
--$0 class P at 'Dsf'; RE 0%;
--$0 class Q at 'Dsf'; RE 0%.
The class A-1, A-2, A-3, A-PB1 and A-PB2 certificates have paid in full. Fitch does not rate the class S certificates. 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. 10, 2014 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' (Aug. 4, 2014);
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 10, 2014).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=812608
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=948877
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