NEW YORK--(BUSINESS WIRE)--Fitch Ratings has upgraded one and affirmed two classes of First Union National Bank-Chase Manhattan Bank Commercial Mortgage Trust (FUNBC) commercial mortgage pass-through certificates series 1999-C2. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The upgrade reflects the high percentage of defeased collateral, low leverage of the remaining non-defeased loans, and the high percentage of fully amortizing loans (68.0%). There are 25 loans remaining in the pool, 13 of which are defeased (51.7% of the pool). Fitch modeled losses of 2.4% of the remaining pool; expected losses on the original pool balance total 2.1%, including $23.7 million (2% of the original pool balance) in realized losses to date. Fitch has designated one Fitch Loan of Concern(5%), which is not specially serviced.
As of the March 2015 distribution date, the pool's aggregate principal balance has been reduced by 97.4% to $30.8 million from $1.18 billion at issuance. Thirteen loans (51.7% of the pool) are defeased, including the largest loan in the pool (10.1%). Interest shortfalls are currently affecting classes M through N.
The second largest loan (9.8%) is backed by a 250-unit multifamily development located in Charlotte, NC. As of year-end 2014, the property was 94% occupied and the debt service coverage ratio was reported to be 1.35x.
Of the pool, 54.3% represents single-tenant property loans, including seven loans with exposure to Rite Aid/Eckerd (24.7%; rated 'B', Positive Outlook by Fitch), four with Walgreens (10.2%; not rated by Fitch), three with CVS (6.5%), and one IHOP (2.8%).
RATING SENSITIVITIES
The Stable Outlook on the class K notes reflects Fitch's Outlook on the rating of the U.S. as the class is fully covered by defeased collateral. The rating on the class L notes is expected to remain stable as the credit enhancement remains high. However, an upgrade to the notes is not anticipated due to the concentration of loans in secondary and tertiary markets and the reliance on collateral backed by single-tenant retail properties. Downgrades to class L are not likely as any losses are expected to be absorbed by class M, which has already experienced losses.
Fitch upgrades the following class as indicated:
--$11.8 million class L to 'BBB-sf' from 'Bsf', Outlook Stable.
Fitch affirms the following classes as indicated:
--$10.3 million class K at 'AAAsf', Outlook Stable;
--$8.7 million class M at 'Dsf', RE 90%.
The class A-1, A-2, B, C, D, E, F, G, H and J certificates have paid in full. Fitch does not rate the class N 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:
--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=864268
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=982358
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