NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed all classes of German American Capital Corp.'s COMM 2012-LC4 commercial mortgage pass-through certificates. A detailed list of rating actions follows at the end of this release.
KEY RATING DRIVERS
The affirmations are due to overall stable performance of the collateral pool since issuance. Currently there are no delinquent or specially serviced loans. As of the January 2015 distribution date, the pool's aggregate principal balance has been reduced by 4.8% to $896.3 million from $951.3 million at issuance.
Fitch has identified two loans (3.6%) as Fitch Loans of Concern (LOC).
The first Fitch LOC (2.9% of the pool) is secured by a 628,063 square foot (sf) interest in Susquehanna Valley Mall, a 744,70 sf regional mall located in Selinsgrove, PA, approximately 50 miles north of Harrisburg, PA. Sears, Taco Bell, Applebee's, and Friendly's are not part of the collateral; these tenants own their stores. As of the September 2014 rent roll, the property was 95.5% occupied, compared to 97% at YE2013 and 95% at YE2012. The property was 94.7% at UW. The collateral anchor tenants include Boscov's (21.0% of NRA, expiry April 2023), Bon-Ton (12.1%, expiry Jan. 2017), and JC Penney (9.1%, expiry Nov. 2015). This location is on JC Penney's store closing list, and Fitch's analysis reflects the loss of the store. Servicer reported 3Q14 DSCR was 1.84x, steadily declining from 1.98x at YE2013, 2.0x at YE2012 and 2.15x at UW. Fitch anticipates DSCR will decrease further with the loss of JC Penney rents.
The second Fitch LOC (0.7%) is secured by a 152-unit, Class B student housing community located in Nacogdoches, TX. The property suffered a significant occupancy decline due to poor property management. The occupancy dropped from 99.3% at issuance to 60% in August 2013. The borrower removed the previous manager and has since actively managed the property and reduced asking rents in an effort to boost occupancy, which has recovered to 80%. However, net operating income (NOI) has suffered due to reduced revenues. The servicer reported 2Q'14 DSCR decreased to 0.85x, from 0.91x at YE2013, 1.15x at YE2012 and 1.51x at UW. The loan had fallen in and out of delinquency between July 2013 and March 2014. The borrower has since brought the loan current.
The largest loan in the pool is secured by 541,128 square feet of a 928,667 sf two-level regional mall located in Saugus, MA (10.4%), approximately 10 miles north of Boston. The collateral is shadow anchored by Sears and Macy's, which own their stores. The largest tenants include Dick's Sporting Goods (12.7% of NRA) and Best Buy (11.1%), which has extended its lease for five years until Feb. 28, 2018. As of 3Q'14, the property was 95% occupied, compared to 89% at YE2013, 87% at YE2012 and 90% at UW. 3Q'14 DSCR was 2.28x, compared to 2.34x at YE2013, 2.61x at YE2012, and 1.93x at UW.
The second largest loan is secured by the leasehold interest in a 236,215 sf multi-level anchored retail center located in the Union Square area of Manhattan (8%). The property is 100% occupied by seven tenants, including a 14-screen Regal Cinemas theater (50.3%), Best Buy (19.5%), and Nordstrom Rack (13.6%). The nearest lease expiration date is January 2017. The loan has an investment grade credit opinion by Fitch. The servicer reported 2Q'14 DSCR was 4.57x, compared to 4.29x at YE213, 4.5x at YE2012 and 4.34x at UW.
RATING SENSITIVITIES
The Outlook remains Stable for all classes. No rating actions are expected unless there are material changes in property occupancy or cash flow.
Fitch affirms the following classes. The Rating Outlooks remain Stable:
--$3.9 million class A-1 at 'AAAsf'; Outlook Stable;
--$77.8 million class A-2 at 'AAAsf'; Outlook Stable;
--$115.6 million class A-3 at 'AAAsf'; Outlook Stable;
--$416.5 million class A-4 at 'AAAsf'; Outlook Stable;
--$93 million class A-M at 'AAAsf'; Outlook Stable;
--Interest-Only class X-A at 'AAA'; Outlook Stable;
--$44.7 million class B at 'AAsf'; Outlook Stable;
--$32.9 million class C at 'Asf'; Outlook Stable;
--$52.9 million class D at 'BBB-sf'; Outlook Stable;
--$15.3 million class E at 'BBsf'; Outlook Stable;
--$11.8 million class F at 'Bsf'; Outlook Stable.
Fitch does not rate the class G and HP certificates, or the interest-only class X-B.
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 then CMBS then Criteria Reports
A comparison of the transaction's representations, warranties, and enforcement mechanisms to those of typical representations, warranties, and enforcement Mechanisms for CMBS transactions is available by accessing the following report 'COMM 2012-LC4-Appendix'.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 10, 2014);
--'Global Structured Finance Rating Criteria' (Aug 4, 2014).
Applicable Criteria and Related Research:
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=812608
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=978901
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.