CHICAGO--(BUSINESS WIRE)--Fitch Ratings has upgraded three classes and affirmed 10 classes of Banc of America Commercial Mortgage Inc. (BACM 2004-4) commercial mortgage pass-through certificates series 2004-4. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The upgrades reflect the increased credit enhancement as a result of significant principal paydown since Fitch's last rating action in December 2013. Fitch modeled losses of 12.4% of the remaining pool; expected losses on the original pool balance total 4.3%, including $44.6 million (3.4% of the original pool balance) in realized losses to date. Fitch has designated five loans (29%) as Fitch Loans of Concern, which includes one specially serviced asset (7.2%).
As of the November 2014 distribution date, the pool's aggregate principal balance has been reduced by 92.9% to $92.5 million from $1.3 billion at issuance. No loans are defeased. Interest shortfalls are currently affecting classes G through P.
Of the remaining 13 loans, seven are secured by manufactured housing communities representing 73.9% of the pool. Additionally, the pool has a high single-borrower concentration, with loans sponsored by Sun Communities Inc. representing 71.1% of the pool. Loans in special servicing or with recently reported NOI DSCR below 1.0x represent 29% of the pool.
The largest contributor to expected losses is a loan (7.2% of the pool) secured by a 50,414 sf retail property located in Pleasant Hill, CA. The loan transferred to special servicing in December 2013 due to imminent maturity default and environmental issues at the property. The servicer is considering offers from the sponsor related to a discounted payoff of the loan.
The largest loan in the pool (24.2% of the pool) is the Sun Communities Portfolio 12 which is secured by a portfolio of four manufactured housing communities located in Michigan and Florida. As of June 2014, the portfolio was 94% occupied with a NOI DSCR of 1.78x. The largest loan is cross-collateralized with the 3rd largest loan in the pool, Sun Communities - Catalina (9.8%), which is a 462 pad manufactured housing community located in Middletown, OH. As of March 2014, occupancy was 62% with NOI DSCR of 1.05x. Together the crossed loans represent 33.3% of the pool.
Outlooks remain Stable as the classes benefit from increasing credit enhancement and continued delevering of the transaction through amortization. Despite improved credit enhancement levels, the limited upgrades to classes D through G reflect the concentrated nature of the pool coupled with the weakness of remaining collateral in tertiary markets and loans maturing in an uncertain refinance environment in 2016. The distressed class may be subject to further rating actions as losses are realized.
Fitch upgrades the following classes as indicated:
--$11.3 million class C to 'AAAsf' from 'AAsf'; Outlook Stable;
--$21.1 million class D to 'Asf' from 'BBBsf'; Outlook Stable;
--$9.7 million class E to 'BBBsf' from 'BBB-sf'; Outlook Stable.
Fitch affirms the following class and revises the Rating Outlook as indicated:
--$11.3 million class G at 'B-sf'; Outlook to Stable from Negative.
Fitch affirms the following classes as indicated:
--$4.2 million class B at 'AAAsf'; Outlook Stable;
--$16.2 million class F at 'Bsf'; Outlook Stable;
--$16.2 million class H at 'CCCsf'; RE 55%;
--$2.4 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%.
The class A-1A, DM-A, DM-B, DM-C, DM-D, DM-E, DM-F and DM-G certificates have paid in full. Fitch does not rate the class P and BC certificates. Fitch previously withdrew the ratings on the interest-only class X-C and X-P certificates.
Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 18, 2012 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. 18, 2012).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria - Effective from 24 May 2013 - 20 May 2014
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria - Effective Dec. 18, 2012 to Dec. 11, 2013