NEW YORK--(BUSINESS WIRE)--Fitch Ratings has downgraded one distressed class and affirmed 21 classes of Credit Suisse Commercial Mortgage Trust (CSMC) commercial mortgage pass-through certificates series 2008-C1. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
Fitch's affirmations are based on the relatively stable performance of the underlying collateral pool. The downgrade to the already distressed class is due to a greater certainty of losses.
Fitch modeled losses of 11.4% of the remaining pool; expected losses on the original pool balance total 13%, including $45.4 million (5.1% of the original pool balance) in realized losses to date. Fitch has designated 14 loans (23.1%) as Fitch Loans of Concern, which includes one specially serviced asset (0.5%).
As of the January 2015 distribution date, there are 42 loans remaining from the original 62 loans and the pool's aggregate principal balance has been reduced by 30.6% to $616.1 million from $887.2 million at issuance. Interest shortfalls are currently affecting classes F through S.
The largest contributor to expected losses is the 1100 Executive Tower loan (14.6% of the pool), which is secured by a 16-story, 380,000-square foot office building in Orange, CA. The loan was modified in February 2011 and was returned to the master servicer in May 2011. Key terms of the modification include a five-year extension of the loan to May 11, 2017, a bifurcation of the note into a $62 million A-note and a $27.5 million B-note, a contribution of approximately $12.6 million in new capital from the borrower, and reimbursement of certain costs associated with the modification. In addition, the yield maintenance charge will be waived for a lender-approved arm's length sale of the property during the modified loan term. Occupancy has increased to 86% as of year-end 2014 up from 74% in Sept. 2014 and as low as 48% in Dec. 2010. The most recent servicer-reported DSCR as of September 2014 was 0.68x reflecting the lower occupancy and down from 1.57x at year-end 2013. There is potential rollover with 13% of the leases expiring in 2015 and 22% in 2016.
The next largest contributor to expected losses is the Waikiki Beach Walk Retail loan (21.2%), which is secured by roughly 88,000 sf of retail space in the Waikiki Beach Walk, a master-planned project that includes hotels, condominiums, time shares, entertainment venues, and shopping, located in Honolulu, HI. In 2013, servicer-reported net operating income (NOI) from the property was down by 12.7% compared with the issuer's underwriting, but NOI has increased each year since 2010. While the property has continued to have strong occupancy of 99% as of January 2015, the $130.3 million interest-only loan remains highly leveraged.
The third largest contributor to expected losses is the Killeen Mall loan (13.3%), which is secured by 387,000 sf of a 558,000 sf regional mall located in Killeen, Texas, home to Fort Hood, the nation's largest armed forces training and development facility. Occupancy at the property has increased significantly from 70% in December 2010 to 97% as of September 2014. The property has lease rollover risk for only 4% of the mall's NRA through year-end 2015. The NOI of the property has been stable with a servicer-reported NOI DSCR of 1.34x at September 2014 and 1.35x at year-end 2013.
The Rating Outlooks on all classes are expected to remain Stable as property level performance has been relatively stable. Additional downgrades to the distressed classes (those rated below 'B') are expected as losses are realized.
Fitch downgrades the following class:
--$14.4 million class H to 'Csf' from 'CCsf'; RE 0%.
Fitch affirms the following classes:
--$48.8 million class A-2 at 'AAAsf'; Outlook Stable;
--$11.9 million class A-AB at 'AAAsf'; Outlook Stable;
--$258 million class A-3 at 'AAAsf'; Outlook Stable;
--$52.8 million class A-1-A at 'AAAsf'; Outlook Stable;
--$25.5 million class A-2FL at 'AAAsf'; Outlook Stable;
--$88.7 million class A-M at 'Asf'; Outlook Stable;
--$57.7 million class A-J at 'Bsf'; Outlook Stable;
--$8.9 million class B at 'CCCsf'; RE 80%;
--$8.9 million class C at 'CCCsf'; RE 0%;
--$12.2 million class D at 'CCCsf'; RE 0%;
--$10 million class E at 'CCCsf'; RE 0%;
--$6.7 million class F at 'CCsf'; RE 0%;
--$8.9 million class G at 'CCsf'; RE 0%;
--$2.8 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 certificates have paid in full. Fitch does not rate the class S certificates. Fitch previously withdrew the rating on the interest-only class A-X 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
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria