CHICAGO--(BUSINESS WIRE)--Fitch Ratings upgrades one class and affirms the remaining distressed class of Capital Lease Funding Securitization, L.P., Series 1997-CTL-1 corporate credit backed pass-through securities. A detailed list of rating actions follows at the end of this release.
KEY RATING DRIVERS
The upgrade reflects the low leverage and full amortization of the remaining six loans in the pool. The remaining loans have maturity dates in 2016 (12.2%), 2020 (12.2%), 2021 (60.6%), and 2022 (15.0%) and each is a credit tenant lease on a single-tenant property. Currently, 12.21% of the underlying credit tenants are considered investment grade, compared with 19.2% at the previous rating action in March 2014 and 69.6% at issuance.
As of the February 2015 distribution, the pool balance has been reduced by 95.7% to $5.6 million from $129.4 million at issuance. None of the rated classes have incurred an interest shortfall and losses to date are $6.18 million (4.78% of the original balance).
The pool's listed tenants are: Radioshack Corp. (60.7% of the pool, rated 'D' as of February 2015), Rite Aid Corp. (27.1%; rated 'B' with a Positive Outlook as of January 2015), Walgreen Co. (4.8%; rated investment grade), Delhaize America Inc. (4.3%; rated investment grade), and CVS Caremark Corporation (3.1%; rated investment grade).
The largest loan in the pool (60.7%) is leased fee interest of a 184,000 square foot (sf) industrial building located directly south of Salt Lake City, UT. The property was originally owned and occupied by Radioshack; however, an inspection report indicated that the building's current tenant is Costco. The building appeared to be well maintained and fully utilized by the sub-tenant.
RATINGS SENSITIVITIES
The Rating Outlook on class D is Stable as no rating changes are expected. While credit enhancement is high, additional upgrades are not anticipated due to the significant concentration of the remaining pool and the risks associated with single-tenant properties with primarily below investment-grade tenants. In addition, due to the nature of credit tenant leases, the master servicer does not provide updated financial reporting, leasing information, or other performance details for the loans in the pool.
Fitch upgrades the following class as indicated:
--$1.8 million class D to 'BBsf' from 'Bsf', Outlook Stable.
Fitch affirms the following class and Recovery Estimate:
--$3.8 million class E at 'Dsf'; RE 50%.
Classes A-1, A-2, A-3, B, and C have repaid in full. Classes F and G, which remain at 'D'; RE 0%, have been reduced to zero due to realized losses. Fitch previously withdrew its rating on the interest-only class IO.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (May 20, 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=980806
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